Jerome Powell, who heads the Federal Reserve, gave hints about more interest rate hikes in the near future. However, the thing which made things even more difficult was admitting the fact that even these rate hikes will not be enough to control price inflation.
In short, inflation will continue to rise despite the rise of interest rates in the USA. So in a sense, inflation is no longer a factor that can be controlled by the US Federal Reserve. This is also an indication that the Joe Biden Administration's fiscal policy is no longer following its original path.
The Federal Reserve Bank in Kansas City issued a rather interesting white paper in which they discussed inflation in the form of fiscal limits. In a sense, it was an attempt to shift the blame for rising inflation toward the elected officials.
According to the paper, rising inflation could not be controlled by simply adjusting the monetary policy. To combat the inflation problem, a combination of fiscal and monetary policies was required to avoid stagflation.
In simple words, the expansionary fiscal policy of Biden's government is going against the Fed's policy of adopting a together monetary policy.
Normally, central bankers usually avoid talking about fiscal policies to avoid getting involved in politics. But it seems that's no longer the case, as evident from the release of this white paper.
Whether the Fed tries to put the blame on the political administration or vice versa, one thing is for certain - Inflation is high in the USA, and it seems that there is no plan in place to curb it!
According to experts, the forgiveness of student loans is going to add $500 billion (at the minimum) to the Federal budget deficit.
Then we have other problems such as the high cost of energy products, food shortages, and the ongoing Russia Ukraine war. Together, this has created an environment where inflation has turned into a beast that can't be tamed.