prices stable and have moderate long-term interest rates. The Fed uses interest rates as either a gas pedal or a brake on the economy when needed. Generally, the central bank aims to keep inflation around 2% annually, a benchmark that it lagged before the pandemic but now must address. Federal Reserve Bank of New York leader John Williams said that he is open to the central bank doing a half-percentage-point interest rate increase if the economy’s outlook calls for it, while stopping short of saying such an action is likely, and that’s why on March 16, 2022, Fed Chairman Jerome Powell declared a 0.5%, rate increase for the first time since 2018 to address the worst inflation in 40 years spurred by the coronavirus pandemic. The Personal Consumption Expenditures Price Index (PCEPI), which is the Federal Reserve’s preferred measure of inflation, grew at a continuously compounding annual rate of 6.1 percent from February 2021 to February 2022, up from 5.9 percent in the previous month. Although temporary supply disturbances push up prices, they do so temporarily. As restrictions on activity and the risks of COVID-19 subside, supplies will rebound, and prices will fall. Much the same can be said about the conflict in Ukraine, which will eventually end. COVID-19 pandemic is expected to reverse given the widespread use of vaccines, less dangerous variants in circulation, and the decisions of policymakers to relax restrictions imposed to stop the spread (2022, Luther).
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