Will Inflation Win the Republicans the Midterms?
A new ABC News-Ipsos poll has revealed that registered voters favor the Republican party over Democrats on the economy ahead of the November 8 midterm elections.
A new ABC News-Ipsos poll has revealed that registered voters favor the Republican party over Democrats on the economy ahead of the November 8 midterm elections, Bloomberg reported.
The survey found that 38 percent of respondents trust the GOP more on the economy, compared to 24 percent who trust Democrats more. About a third of respondents say they trust neither party.
The poll’s results come as the Labor Department announced earlier this month that the consumer price index (CPI) was found to have risen 0.4 percent for September and 8.2 percent on an annual basis, as climbing food and rent costs again offset moderating gas prices. Core inflation, which excludes volatile food and energy items, was up 6.6 percent compared to a year ago, the largest annual gain since August 1982.
The new CPI numbers suggest that more aggressive interest rate hikes are highly likely going forward. Last month, the Federal Reserve signed off on a third straight seventy-five-basis-point interest rate hike and suggested that it will keep raising rates well above the current level. With the move, the central bank took its federal funds rate up to a range of 3 percent to 3.25 percent, the highest level since 2008.
Markets are widely expecting the Fed to sign off on a fourth-straight seventy-five-basis-point hike early next month, followed by another in December. Philadelphia Federal Reserve president Patrick Harker said late last week that more interest rate hikes will be needed to tame decades-high inflationary pressures.
“We are going to keep raising rates for a while. Given our frankly disappointing lack of progress on curtailing inflation, I expect we will be well above 4 percent by the end of the year,” he said, per CNBC.
“Sometime next year, we are going to stop hiking rates. At that point, I think we should hold at a restrictive rate for a while to let monetary policy do its work. It will take a while for the higher cost of capital to work its way through the economy. After that, if we have to, we can tighten further, based on the data,” he continued.
The business news network also reported Monday that while there is a growing chorus of voices who say the central bank should slow or stop its rate increases amid signs of inflation moderating, JPMorgan Chase president Daniel Pinto appears not to be in that camp.
“I think putting inflation back in a box is very important,” he said. “If it causes a slightly deeper recession for a period of time, that is the price we have to pay.”
Ethen Kim Lieser is a Washington state-based Finance and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.