Market MakeHer Podcast 82. Wait…That’s What Caused Inflation? The Fed Pt. 1
Mar 28, 2025
They unpack what inflation really is and the multiple causes behind post‑pandemic price spikes. They trace supply chain breakdowns, labor market tightness and wage pressure, fiscal stimulus and excess savings, and energy shocks. They also explain the Federal Reserve's role, its tools, and why words like transitory and tariffs matter for monetary policy.
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Fed's Dual Mandate Shapes Policy
- The Fed has a dual mandate: price stability and maximum employment guiding monetary policy decisions.
- Soft data like consumer 'feels' matters because price stability is partly judged by whether people consider prices in decisions.
Supply Chains Kicked Off Inflation
- Broken global supply chains from COVID were the main trigger for the inflation surge.
- The San Francisco Fed estimated supply issues caused about 60% of that inflation, not excess demand alone.
Tight Labor Market Raised Wages
- A tight labor market after COVID created wage pressure as firms competed for scarce workers.
- Rising wages fed into higher prices when businesses passed labor costs onto consumers.