The Federal Open Market Committee of the Federal Reserve at the end of its two-day meeting on July 29 kept the interest rate unchanged at 3.5 per cent to 3.75 per cent by a 9-3 majority. The nine of the 12 who voted in favour of keeping the interest rate unchanged recognised the fact that inflation was fare higher than the 2 per cent limit set by the Federal Reserve. Inflation is above 3 per cent and more. Fed Reserve chairman, Ken Warsh, a Donald Trump appointee, had conceded that inflation was indeed high, but his hope was that inflation would find its own way down.

That is indeed high-level optimism. Warsh declared much like his predecessor Jerome Powell that there would be “no tolerance for persistently elevated inflation.” Trump’s demand from Powell was for lowering interest rates. But given the slow recovery in the economy after Covid, inflation was high and Powell declared the main........

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