Inflation

Inflation, a rise in the average level of all prices, is a problem that can affect both developed and undeveloped countries. It occurs when the economy is producing at or near full capacity. As inflation increases, the purchasing power of the dollar decreases. As prices rise, wages and salaries also have a tendency to rise. More money in people’s pockets causes prices to increase even higher. This can make it hard for consumers to …

…inflation levels will decrease. Even with high interest rates our country can operate at full potential. It just eliminates the negative effects of inflation. It may not seem like the best idea right now, but the central rule of thumb in banking is that changes in monetary policy take a least a year to have impact on the economy, which means, this month's rate is aimed at applying the brakes late next year and beyond.