Policymakers and economists are finding that when it comes to fighting rising prices, it takes a village. The Federal Reserve's interest rate hikes aren't the only game in town.
Meanwhile, the German government late last year passed measures to cap energy prices in the country. Starting this month, every household and business gets a certain amount of gas and electricity — up to 80% of past usage — at a below-market price.
The idea is to help people pay their bills without increasing the demand for energy, which would push up prices., an improvement from the prior month when prices were up 39% year over year.
Weber tells Axios that if governments can figure out ways to manage price shocks in these sectors, then they can avert, or get ahead of, future inflation — so the drastic measure of triggering a recession can be avoided.Even the White House's handling of the potential rail strike last year was done with an eye toward managing inflation, says Claudia Sahm, a former Federal Reserve economist.
A strike's impact on trade and supply chains would have certainly been inflationary, she says. So the pro-labor White House walked "a tightrope," forcing workers to accept a deal that wasn't satisfactory to many workers and their advocates.Fiscal spending in the form of big cash transfers to Americans, of the sort we saw in 2020 and 2021, isn't a thing anymore. Lawmakers on both sides are wary of contributing to inflation.
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