Retired A-State economics professor explains inflation – KAIT

by | Oct 23, 2022 | Financial

JONESBORO, Ark. (KAIT) – Rising prices on store shelves and at the pumps are putting constraints on many household budgets.Inflation and interest rates have an inverse relationship, as interest rates begin to rise, we start to see a reduction in inflation rates. The Central Bank will raise interest rates to discourage people from borrowing money, this makes it harder to buy homes and cars, or take out any type of loan.Dr. Gary Latanich is a retired professor of economics at Arkansas State University who said he’s not seen inflation rates this high since the 80′s.Many Americans are having to start pulling out of their savings to make ends meet.“Saving levels in the United States are around $2500, most Americans do not have ready access to $400, so it hurts families a lot,” said Dr. Latanich.Dr. Latanich said raising interest rates is a good way to fight inflation, in the 1980s the interest rates were raised to 17% to fight inflation.“For some people, this is going to drastically affect their ability to save, to the extent where they try to maintain their lifestyle, will drain their savings,” said Dr. Latanich.Not only does inflation have an impact on the wallets of many but also on their mental health, which is why Dr. Latanich is worried that trying to maintain your current lifestyle will put peopl …

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