Increases in interest rates are inevitable as a result. Wall Street expects the Fed to start pushing borrowing costs up in March, with four quarter-point jumps this year and a further four in 2023, taking them to just over 2%. This is a long way short of the shock treatment administered by Volcker – official borrowing costs peaked at 20% in 1981 – but it will still be enough to slow the US economy and make life harder for the Democrats in November’s midterm elections.
The Guardian really needs to pay some attention to the difference between nominal and real interest rates.
Inflation in 1981 was 10% – ish. So real interest rates were 10%. If the Fed raises to 2% then real interest rates will be minus 5%.
Not saying that either is right or wrong but they sure are different.