Key Points
- As shoppers await price cuts, retailers like Home Depot say their prices have stabilized and some national consumer brands have paused price increases or announced more modest ones.
- Yet some industry watchers predict deflation for food at home later this year.
- Falling prices could bring new challenges for retailers, such as pressure to drive more volume or look for ways to cover fixed costs, such as higher employee wages.
We currently have a high base interest rate set by the fed. The country can fight deflation easily by cutting the rate from its 5 base points, which will increase lending and spending
This shouldn’t be an issue now.
The debate is whether to cut the FFR yet.
I’m against it. But people are rightfully worried about deflation. Its a terrifying situation from an economic point of view.
But you’re right. There’s very little sign of deflation (yet). We can hold rates higher, and maybe even go another +.25% up. Inflation is at a safe level right now, not too high and not too low, but we need to stay on guard to make sure it stays in this golden zone, and move as appropriate.
There were too many new jobs (too little unemployment) again in January. So we might still have rates too low IMO.