The Federal Reserve is set to raise interest rates at its September 20-21 meeting after hiking rates four times already this year. The nation’s central bank is expected to lift the benchmark Fed funds rate by 0.75 percentage points, according to the CME FedWatch tool, though a sizable minority expects rates to rise a full percentage point. Referenced
Federal Reserve and the printing of more money.
When the Federal Reserve prints more money it only increases the amount of cash in circulation, but does not increase the economic output, this would enable consumers to demand more goods, but if suppliers only have the same number of goods it will only cause those suppliers to put up their prices, because there would be more demand for goods than there are supplies, so printing more money will only cause inflation
How printing money causes inflation – Example
- Suppose an economy produces $10 million worth of goods; e.g. 1 million books at $10 each. At this time the money supply will be $10 million.
- If the government doubled the money supply, we would still have 1 million books, but people have more money. Demand for books would rise, and in response to higher demand, firms would push up prices. Referenced