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Is Inflation Slowing Down From Higher Interest Rates?

Many people are wondering if the higher interest rates set by the Federal Reserve are slowing inflation. For nine months … Read more



Many people are wondering if the higher interest rates set by the Federal Reserve are slowing inflation. For nine months straight, the annual inflation rate has been decreasing. However, the Consumer Price Index’s (CPI) data will sometimes show specific sectors experiencing price increases despite a general trend of decreasing inflation. 

This article will look at what effect the increase in interest rates has had on inflation and what possible negative consequences could be.

Key Takeaways

  • The Federal Reserve uses higher interest rates to combat high inflation.
  • High inflation has been partly due to the pandemic, government spending, and the Russia-Ukraine conflict.
  • Experts often worry that raising interest rates will harm the economy more than help it, but many also argue it’s a necessary step to managing unsustainable growth. 

Why Did Interest Rates Rise So Much?

Interest rates dramatically rose in 2022 because of record-high inflation numbers. Inflation spiked due to various factors, including government spending during the pandemic, supply chain issues, historically low interest rates, high energy prices, and the Russia-Ukraine conflict.

Inflation is the devaluation of a country’s currency, usually caused by a mismatch of supply and demand. For example, during the COVID-19 pandemic, the United States government gave out stimulus checks to encourage discretionary spending and reinvigorate the economy. Some experts feared that the checks were boosting demand at a time supply chains were disrupted, pushing companies to raise prices. 

If a company faces low demand for a good, it’ll often lower prices to incentivize consumers to buy its product. Conversely, if demand for a product is too high, a company will often raise prices to keep its supply from being overwhelmed.  

When inflation began to rise, the Federal Reserve believed the increases were temporary and would come down as quickly as they grew. However, this was not the case, as inflation is still high after many months.

In June 2022, the Consumer Price Index, which measures inflation, peaked at 9.1%. In July, the rate was 8.5%, and in August, it was 8.3%. While the overall number had begun declining, the data within the reports didn’t indicate inflation was cooling off for everyone.

Oil prices dropped throughout 2022, which helped to lower the annual inflation rate, but food and rent costs didn’t initially see the same month-to-month decrease. 

Recent Numbers

Recent data from the Bureau of Labor Statistics shows the shelter index – including money spent on rented and owned houses – increased 8.2% in March 2023. This was arguably the most significant contributor to the annual inflation rate in March 2023, even as other economic sectors cooled off.

With OPEC+ recently announcing further reductions to its oil production, analysts are warning of higher energy prices in the coming months.

To combat rising inflation, the Federal Reserve uses the primary tool it has—interest rates. Between March 2022 and March 2023, the Fed raised the federal funds rate from near 0% to its current 4.75-5.00%. The Fed’s next meeting will take place between May 2nd and 3rd. We’ll have to wait to see what happens, but many experts anticipate another rate hike of 25 basis points up to 5.00-5.25%. 

How Do Higher Interest Rates Slow Inflation?

Higher interest rates slow inflation in several ways. First, higher interest rates make it more expensive to borrow money. The federal funds rate indirectly influences the rate at which banks lend each other money. 

Banks have to meet specific reserve requirements related to how much money they keep on hand, so when the fed funds rate increases, the money circulation decreases, and short-term interest rates increase. For consumers, this shows up as higher interest rates on mortgages, auto loans, and credit card debt. When it costs more to borrow money, people will spend less overall. 

On the business front, higher interest rates mean businesses will be less likely to borrow money to expand. By slowing down business growth, the economy also slows down.

Another impact of higher interest rates is on savings. The interest rates on savings accounts, certificates of deposit, and bonds will rise, encouraging individuals and investors to save and invest more of their money. The more money they save and invest, the less money they have to spend, decreasing demand.

Combining these two ideas, we can say less consumer demand will ease demand and increase supply. Over time, this should lead to inflation returning to normal levels and the rise of prices stopping. The Federal Reserve aims for an annual inflation rate of only 2%. Even with the annual rate dropping to 5.0% in March 2023, that’s still above the optimal rate. 

The caveat to this is time. While increasing interest rates happen in real-time, their effects play out over many months. The potential problem is that even though the Fed has aggressively raised rates, not enough time has passed to see their full impact. The result that some economists fear is a hard landing where rising interest rates push demand so low the economy enters a recession.

What Is The Difference Between A Recession And A Depression? 

A recession is a normal part of the economic cycle and tends to last for a shorter time and have less of a negative impact on most consumers. That doesn’t mean it’s not painful, though, as recessions often lead to increased unemployment, decreased consumer spending, and general anxiety about the economy. 

The U.S. has experienced 14 recessions since the Great Depression of the early 1930s. This makes them much more common than a depression, which has only happened once in U.S. economic history. 

Experts generally define a depression as a severe drop in GDP lasting more than a year. Most experts date the Great Depression as lasting between 1929 and 1941. 

Do Higher Interest Rates Work to Slow Inflation?

Many people, including legislators, are skeptical of whether increasing interest rates can slow inflation. For example, we can look at an exchange that happened in June 2022 during the Semiannual Monetary Policy Report to Congress.

Senator Elizabeth Warren (D-Massachusetts): “Chair Powell, will gas prices go down as a result of your interest rate increase?” 

Chairman Powell “I would not think so, no.”

Senator Warren: “Chair Powell, will the Fed’s interest rate increases bring food prices down for families?” 

Chairman Powell “I wouldn’t say so, no.”

Senator Warren: “The reason I raise this and the reason I’m so concerned about this is rate increases make it more likely that companies will fire people and slash hours to shrink wage costs. Rate increases also make it more expensive for families to do things like borrow money for a house. And so far this year, the cost of a mortgage has already doubled.

“Inflation is like an illness. And the medicine needs to be tailored to the specific problem. Otherwise, you could make things a lot worse. And right now, the Fed has no control over the main drivers of rising prices, but the Fed can slow demand by getting a lot of people fired and making families poorer.”

Food And Shelter Prices

It’s very reasonable to ask why things like food and shelter prices shouldn’t decrease from higher interest rates. If higher interest rates increase saving and reduce demand, shouldn’t that lower the cost of everything? 

Experts believe that rising interest rates don’t always have as much impact on these sectors because their prices are affected by more than one factor.  

For example, one leading cause of higher food costs in 2022 was supply chain issues. The food supply needed to increase to combat this, and agricultural commodities have since seen a price drop. Also, if businesses stop hiring or cut workers’ hours, they won’t be able to produce as much, decreasing the supply further.

The main idea with higher interest rates is to slow demand, but demand for food can only decrease so much. It’s a basic necessity and isn’t always impacted by reduced discretionary spending.

There is also no clear correlation between interest rates and shelter prices. Though rental prices should ideally decrease when rates are high as demand has dropped, they may increase as the cost of borrowing money for landlords and property developers increases.

Government Spending

If we look at the government, the money it spends also significantly impacts inflation. If the government chooses not to reduce spending, the increase in interest rates will have minimal effect.

Leonardo Melosi of the Chicago Fed and Francesco Bianchi of Johns Hopkins University say, “The recent fiscal interventions in response to the COVID-19 pandemic have altered the private sector’s beliefs about the fiscal framework, accelerating the recovery but also determining an increase in fiscal inflation. This increase in inflation could not have been averted by simply tightening monetary policy.”

The Bottom Line

The Federal Reserve’s primary tool to fight inflation is increasing interest rates. While higher rates impact prices, inflation doesn’t disappear overnight. This can spell trouble for the U.S. economy since raising rates too quickly can lead to a recession.

Additionally, without the government reducing spending, the increase in interest rates might have minimal effect on inflation. The upcoming months will give us more insight into whether higher interest rates are or aren’t working.

With oil prices likely heading higher, the monthly inflation report won’t be able to rely on lower oil prices offsetting increased costs elsewhere. If everything rises and inflation doesn’t continue to cool off, the Fed will likely resume raising interest rates.

The post Is Inflation Slowing Down From Higher Interest Rates? appeared first on Due.

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World Bank: Global Economic Growth Expected To Slow To 2008 Levels

World Bank: Global Economic Growth Expected To Slow To 2008 Levels

Authored by Michael Maharrey via,

Most people in the mainstream…



World Bank: Global Economic Growth Expected To Slow To 2008 Levels

Authored by Michael Maharrey via,

Most people in the mainstream concede that the economy is heading for a recession, but the consensus seems to be that downturn will be short and shallow. Projections by the World Bank undercut that optimism.

According to the World Bank, global growth in 2023 will slow to the lowest level since the 2008 financial crisis.

In other words, the World Bank is predicting the beginning of Great Recession 2.0.

You might recall that the Great Recession was neither short nor shallow.

In fact, World Bank Group chief economist and senior vice president Indermit Gill said, “The world economy is in a precarious position.”

According to the World Bank’s new Global Economic Prospects report, global growth is projected to decelerate to 2.1% this year, falling from 3.1% in 2022. The bank forecasts a significant slowdown during the last half of this year.

That would match the global growth rate during the 2008 financial crisis.

According to the World Bank, higher interest rates, inflation, and more restrictive credit conditions will drive the economic downturn.

The report forecasts that growth in advanced economies will slow from 2.6% in 2022 to 0.7% this year and remain weak in 2024.

Emerging market economies will feel significant pain from the economic slowdown. Yahoo Finance reported, “Higher interest rates are a problem for emerging markets, which already were reeling from the overlapping shocks of the pandemic and the Russian invasion of Ukraine. They make it harder for those economies to service debt loans denominated in US dollars.”

The World Bank report paints a bleak picture.

The world economy remains hobbled. Besieged by high inflation, tight global financial markets, and record debt levels, many countries are simply growing poorer.”

Absent from the World Bank analysis is any mention of how more than a decade of artificially low interest rates and trillions of dollars in quantitative easing by central banks created the wave of inflation that continues to sweep the globe, along with massive levels of debt and all kinds of economic bubbles.

If you listen to the mainstream narrative, you would think inflation just came out of nowhere, and central banks are innocent victims nobly struggling to save the day by raising interest rates. Pundits fret about rising rates but never mention that rates were only so low for so long because of the actions of central banks. And they seem oblivious to the consequences of those policies.

But being oblivious doesn’t shield you from the impact of those consequences.

In reality, central banks and governments implemented policies intended to incentivize the accumulation of debt. They created trillions of dollars out of thin air and showered the world with stimulus, unleashing the inflation monster. And now they’re trying to battle the dragon they set loose by raising interest rates. This will inevitably pop the bubble they intentionally blew up. That’s why the World Bank is forecasting Great Recession-era growth. All of this was entirely predictable.

After all, artificially low interest rates are the mother’s milk of a global economy built on easy money and debt. When you take away the milk, the baby gets hungry. That’s what’s happening today. With interest rates rising, the bubbles are starting to pop.

And it’s probably going to be much worse than most people realize. There are more malinvestments, more debt, and more bubbles in the global economy today than there were in 2008. There is every reason to believe the bust will be much worse today than it was then.

In other words, you can strike “short” and “shallow” from your recession vocabulary.

Even the World Bank is hinting at this.

Tyler Durden Wed, 06/07/2023 - 15:20

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DNAmFitAge: Biological age indicator incorporating physical fitness

“We expect DNAmFitAge will be a useful biomarker for quantifying fitness benefits at an epigenetic level and can be used to evaluate exercise-based interventions.”…



“We expect DNAmFitAge will be a useful biomarker for quantifying fitness benefits at an epigenetic level and can be used to evaluate exercise-based interventions.”

Credit: 2023 McGreevy et al.

“We expect DNAmFitAge will be a useful biomarker for quantifying fitness benefits at an epigenetic level and can be used to evaluate exercise-based interventions.”

BUFFALO, NY- June 7, 2023 – A new research paper was published in Aging (listed by MEDLINE/PubMed as “Aging (Albany NY)” and “Aging-US” by Web of Science) Volume 15, Issue 10, entitled, “DNAmFitAge: biological age indicator incorporating physical fitness.”

Physical fitness is a well-known correlate of health and the aging process and DNA methylation (DNAm) data can capture aging via epigenetic clocks. However, current epigenetic clocks did not yet use measures of mobility, strength, lung, or endurance fitness in their construction. 

In this new study, researchers Kristen M. McGreevy, Zsolt Radak, Ferenc Torma, Matyas Jokai, Ake T. Lu, Daniel W. Belsky, Alexandra Binder, Riccardo E. Marioni, Luigi Ferrucci, Ewelina Pośpiech, Wojciech Branicki, Andrzej Ossowski, Aneta Sitek, Magdalena Spólnicka, Laura M. Raffield, Alex P. Reiner, Simon Cox, Michael Kobor, David L. Corcoran, and Steve Horvath from the University of California Los Angeles, University of Physical Education, Altos Labs, Columbia University Mailman School of Public Health, University of Hawaii, University of Edinburgh, National Institute on Aging, Jagiellonian University, Pomeranian Medical University in Szczecin, University of Łódź, Central Forensic Laboratory of the Police in Warsaw, Poland, University of North Carolina at Chapel Hill, University of Washington, and University of British Columbia develop blood-based DNAm biomarkers for fitness parameters including gait speed (walking speed), maximum handgrip strength, forced expiratory volume in one second (FEV1), and maximal oxygen uptake (VO2max) which have modest correlation with fitness parameters in five large-scale validation datasets (average r between 0.16–0.48). 

“These parameters were chosen because handgrip strength and VO2max provide insight into the two main categories of fitness: strength and endurance [23], and gait speed and FEV1 provide insight into fitness-related organ function: mobility and lung function [8, 24].”

The researchers then used these DNAm fitness parameter biomarkers with DNAmGrimAge, a DNAm mortality risk estimate, to construct DNAmFitAge, a new biological age indicator that incorporates physical fitness. DNAmFitAge was associated with low-intermediate physical activity levels across validation datasets (p = 6.4E-13), and younger/fitter DNAmFitAge corresponds to stronger DNAm fitness parameters in both males and females. 

DNAmFitAge was lower (p = 0.046) and DNAmVO2max is higher (p = 0.023) in male body builders compared to controls. Physically fit people had a younger DNAmFitAge and experienced better age-related outcomes: lower mortality risk (p = 7.2E-51), coronary heart disease risk (p = 2.6E-8), and increased disease-free status (p = 1.1E-7). These new DNAm biomarkers provide researchers a new method to incorporate physical fitness into epigenetic clocks.

“Our newly constructed DNAm biomarkers and DNAmFitAge provide researchers and physicians a new method to incorporate physical fitness into epigenetic clocks and emphasizes the effect lifestyle has on the aging methylome.”

Read the full study: DOI: 

Corresponding Authors: Kristen M. McGreevy, Zsolt Radak, Steve Horvath

Corresponding Emails:,, 

Keywords: epigenetics, aging, physical fitness, biological age, DNA methylation

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About Aging-US:

Launched in 2009, Aging publishes papers of general interest and biological significance in all fields of aging research and age-related diseases, including cancer—and now, with a special focus on COVID-19 vulnerability as an age-dependent syndrome. Topics in Aging go beyond traditional gerontology, including, but not limited to, cellular and molecular biology, human age-related diseases, pathology in model organisms, signal transduction pathways (e.g., p53, sirtuins, and PI-3K/AKT/mTOR, among others), and approaches to modulating these signaling pathways.

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Martha Stewart Has a Spicy Take on Americans Who Want to Work From Home

This half-baked take might need to stay in the oven a little longer.



Lifestyle icon Martha Stewart has been on a roll when it comes to representing vivacious women over 60. Whether she's teaming up to charm audiences alongside her BFF Snoop Dogg, poking fun at Elon Musk, or starring as Sports Illustrated's Swimsuit Issue cover model, Martha stays busy. 

Her most recent publicity moment, however, doesn't have the same wholesome feeling Stewart brings to the table. In an interview with Footwear News, the DIY-queen had some choice words about Americans who want to continue working from home after covid-19 lockdown shut down offices.

“You can’t possibly get everything done working three days a week in the office and two days remotely," the cozy-home guru said. "Look at the success of France with their stupid … you know, off for August, blah blah blah. That’s not a very thriving country. Should America go down the drain because people don’t want to go back to work?”

Well, that's certainly a viewpoint. A lot to unpack there. Many online were confused--after all, didn't Stewart basically make her career by "working from home?"

Sitting down with The Today Show, Stewart elaborated on her controversial stance. It seems she's confusing "work from home" with a three-day workweek. 

"I'm having this argument with so many people these days. It's just that my kind of work is very creative and is very collaborative. And I cannot really stomach another zoom. [...But] I hate going to an office, it's empty. During COVID I took every precaution. We [...] set up an office at [...] my home[...] Now we're our offices and our three day work week, I just don't agree with it," Stewart tells viewers. 

"It's frightening because if you read the economic news and look at what's happening everywhere in the world, a three-day workweek doesn't get the work done, doesn't get the productivity up. It doesn't help with the economy and I think that's very important."

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