Inflation: Who's lowering prices?

Discussion in 'Economics' started by LanceJ, Jul 6, 2022.

  1. LanceJ


    According to J Powell, the fed will raise interest rates until Inflation comes back in line with ~3% expectations? I guess my question is: Who is going to lower their prices in order for that to happen?
    Gas station owners?
    Home owners
    Who goes first? I don't see anyone rushing to lower their prices or feeling pressure from rising rates.
    Or, maybe wages will magically rise to combat the price hikes. Anyone getting a raise soon?
  2. Millionaire


    Inflation at 3% doesn't means prices go down. Although some prices could go down. It just means prices continue to go up but by only 3% instead of the 9% they have been recently.
    murray t turtle and smallfil like this.
  3. smallfil


    That is just the Federal Reserve saying inflation is not that bad to encourage the stockmarket. What Jay Powell says and reality are two different things. If you paid $5 for a can of beans that now costs $10, why would you sell it for $5 or even less? Not going to happen. You probably, will end up eating that can of beans instead.
  4. schizo


    The ONLY reason why the FED is hiking the rate is because they want you to curb your spending. They will keep tightening the rate until their objective is met. Hence, nobody needs to lower their prices. Price will go lower automatically as consumers adjust their spending patterns according. This is called Supply and Demand. Higher the price, less demand there will be and the suppliers must lower the price.

    Dude, that will only fuel the inflation further.
    murray t turtle likes this.
  5. SunTrader


    CL dropped -21.69% June 14th high to today's low. Or hadn't you noticed? Helps to look at charts.
    murray t turtle and kmiller like this.
  6. notagain


    Gasoline down 30 cents, Walmart will be first to lower prices, to gain even more market share.
    Big companies will lower prices to drive the little guy out of business.
    murray t turtle likes this.
  7. Overnight


    Not so fast. I saw a flash headline this afternoon on Bloomberg TV about the US/Allies thinking of capping Russian oil at 50-60 bux? Not sure what that means and have not researched it. So something may be up.
    murray t turtle likes this.
  8. I think Powell is going for the flaccid* Volker technique of causing a recession to get inflation under control

    *flaccid because he's speaking with a forked tongue ("The economy is great!") while afaik Volker was much more up front and stood up to government powers while squeezing money supply to reel in inflation. This stuff doesn't happen over night, takes time for policy changes to start to force the market to adjust, but like someone else pointed out, oil futures have already plummeted, it just takes time for the prices at the pump to change... just like when the oil prices shot up it took pump prices a few months to adjust.
  9. maxinger


    over the past 1 month,

    crude oil, copper cheaper by 35%
    soya bean is cheaper by 25%
    Natural Gas is cheaper by 70%
    etc etc etc

    the list is endless !!!!!
    and you don't have to open your eyes big big to see
    that prices are falling.
    Sprout and murray t turtle like this.
  10. SunTrader


    And a big part of Volcker squeezing out inflation, that many seem to forget, is the price of crude finally dropped dramatically.

    Oil Shock of 1978–79

    "Eventually, slowing economic activity in industrial countries and investments in additional energy production and energy conservation technologies helped to saturate the market with oil and brought an end to the oil crisis. Beginning in mid-1980, real oil prices began to subside, igniting a secular decline that would last for much of the next twenty years."
    #10     Jul 7, 2022
    murray t turtle likes this.