When the Federal Reserve concludes its June Federal Open Market Committee meeting on Wednesday, don’t be surprised if chair Jerome Powell announces the Fed’s biggest interest-rate increase since 1984.

                By                    David Nadelle

See: Inflation Could Push The Fed to Have a ‘Volcker Moment’ And Drastically Raise RatesFind: May Inflation Reaches Highest Level Since 1981, Touches Every Sector of the Economy

Powell’s assertion about the then-current surge in inflation and supply-chain constraints being “transitory” seems like a lifetime ago. With the consumer price index rising to 8.6% in May and Wall Street firms now forecasting 75 basis point hikes, the Fed is under immense pressure to ease the highest rate of inflation in 40 years.

One economist expects things to get worse before they get better, and that includes an inflation rate that could hit 9%.

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Mohamed El-Erian, chief economic adviser of Allianz and President of Queens’ College at Cambridge University, told CBS’ “Face the Nation” Sunday that the April’s slight decrease in consumer prices wasn’t a sign that inflation was about to peak or that it was “transitory, meaning temporary and quickly,” reported Business Insider.

“The darkest period is that inflation persists, heads to 9%, people start worrying that it’s gonna go to 10%, and next thing, you know, we end up in a recession,” El-Erian said. “And that would be tragic if that were to happen.”

The leading economist also doubled down on his criticism of the Federal Reserve and its lack of foresight in curtailing rising prices and for not taking action soon enough.

“What makes this very frustrating is it was partially avoidable,” said El-Erian, per The Washington Examiner.

He is not alone in criticizing the Fed for its delay in acting. As The Washington Examiner reports, former Fed chairman Ben Bernanke calls the Federal Reserve’s handling of the inflation crisis, “a mistake,” and former Treasury Secretary Lawrence Summers says he expects a recession in the next two years.

“I think there’s certainly a risk of recession in the next year,” Summers stated on CNN’s “State of the Union” on Sunday, per the Examiner. “I think given where we’ve gotten to, it’s more likely than not that we’ll have a recession within the next two years.”

Not that this will come as much of a surprise to the average American. In a recent poll conducted by the Washington Post and George Mason University’s Schar School of Policy and Government, most Americans expect inflation to get worse and these beliefs are reflected in changes to their spending habits.

According to the poll, almost nine of 10 people surveyed are trying to find the cheapest prices for products, about six in 10 said they are cutting back on electricity and nearly three-quarters of survey takers are curbing eating at restaurants, spending on entertainment and delaying purchases, per Fox.

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These days, trying to lessen the impact of inflation on our personal spending is the best you can do. How long Americans will need to take these measures is anyone’s guess, including the Fed’s. 

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