Fr. Aug 12th, 2022

The terrible US inflation figures of June 2022 is indicating that tough months lie ahead for the US and the rest of the world. An inflation print of 9.1%, the highest in more than 40 years, means that the Federal Reserve is anything but in control.

„Vulnerable demographics of society in trouble“

Mohamed El-Erian writes in the Financial Times that it is the most vulnerable demographics of society that are feeling the pain. With an annualised inflation rate of 9.1%, America is even well above the forecast of 8.8%. This level of inflation comes as a surprise to most outsiders, as the Federal Reserve has done „everything possible“ to tame inflation by raising interest rates.

Can the general public still be reassured?

All over the world, the newspapers this week have been full of the 9.1% inflation print of the United States. It remains to be seen whether the Federal Reserve and other central banks will succeed in keeping the general public calm. After all, inflation is starting to put more and more people in a financial squeeze. In particular, the sections of the population that were already struggling are almost out of options. It seems that the Federal Reserve has no choice but to react aggressively. The market is already 80% predicting a 1% interest rate increase for the upcoming FOMC meeting.

Moment of truth for bitcoin

The next few months seem to be a so-called „moment of truth“ for the bitcoin exchange rate. It is largely up to the Federal Reserve to decide the fate of the financial markets. Will they choose to bring inflation all the way down to 2 per cent? If so, interest rates will have to increase considerably, but we will probably pay a very big price for that.

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