The inflation rate in the United States declined significantly between June 2022 and May 2025, despite rising inflationary pressures towards the end of 2024. The peak inflation rate was recorded in June 2022, at *** percent. In August 2023, the Federal Reserve's interest rate hit its highest level during the observed period, at **** percent, and remained unchanged until September 2024, when the Federal Reserve implemented its first rate cut since September 2021. By January 2025, the rate dropped to **** percent, signalling a shift in monetary policy. What is the Federal Reserve interest rate? The Federal Reserve interest rate, or the federal funds rate, is the rate at which banks and credit unions lend to and borrow from each other. It is one of the Federal Reserve's key tools for maintaining strong employment rates, stable prices, and reasonable interest rates. The rate is determined by the Federal Reserve and adjusted eight times a year, though it can be changed through emergency meetings during times of crisis. The Fed doesn't directly control the interest rate but sets a target rate. It then uses open market operations to influence rates toward this target. Ways of measuring inflation Inflation is typically measured using several methods, with the most common being the Consumer Price Index (CPI). The CPI tracks the price of a fixed basket of goods and services over time, providing a measure of the price changes consumers face. At the end of 2023, the CPI in the United States was ****** percent, up from ****** a year earlier. A more business-focused measure is the producer price index (PPI), which represents the costs of firms.

In May 2025, global inflation rates and central bank interest rates showed significant variation across major economies. Most economies initiated interest rate cuts from mid-2024 due to declining inflationary pressures. The U.S., UK, and EU central banks followed a consistent pattern of regular rate reductions throughout late 2024. In early 2025, Russia maintained the highest interest rate at 20 percent, while Japan retained the lowest at 0.5 percent. Varied inflation rates across major economies The inflation landscape varies considerably among major economies. China had the lowest inflation rate at -0.1 percent in May 2025. In contrast, Russia maintained a high inflation rate of 9.9 percent. These figures align with broader trends observed in early 2025, where China had the lowest inflation rate among major developed and emerging economies, while Russia's rate remained the highest. Central bank responses and economic indicators Central banks globally implemented aggressive rate hikes throughout 2022-23 to combat inflation. The European Central Bank exemplified this trend, raising rates from 0 percent in January 2022 to 4.5 percent by September 2023. A coordinated shift among major central banks began in mid-2024, with the ECB, Bank of England, and Federal Reserve initiating rate cuts, with forecasts suggesting further cuts through 2025 and 2026.

Due to the recent hyperinflation crisis in Venezuela, the average inflation rate in Venezuela is estimated to be around 225 percent in 2026. However, this is well below the peak of 63,000 percent observed in 2018.What is hyperinflation?In short, hyperinflation is a very high inflation rate that accelerates quickly. It can be caused by a government printing huge amounts of new money to pay for its expenses. The subsequent rapid increase of prices causes the country’s currency to lose value and shortages in goods to occur. People then typically start hoarding goods, which become even more scarce and expensive, money becomes worthless, financial institutions go bankrupt, and eventually, the country’s economy collapses. The Venezuelan descent into hyperinflationIn Venezuela, the economic catastrophe began with government price controls and plummeting oil prices, which caused state-run oil companies to go bankrupt. The government then starting printing new money to cope, thus prices rose rapidly, unemployment increased, and GDP collapsed, all of which was exacerbated by international sanctions. Today, many Venezuelans are emigrating to find work and supplies elsewhere, and population growth is at a decade-low. Current president Nicolás Maduro does not seem inclined to steer away from his course of price controls and economic mismanagement, so the standard of living in the country is not expected to improve significantly anytime soon.

The enduring discourse regarding the effectiveness of interest rate policy in mitigating inflation within developing economies is characterized by the interplay of structural and supply-side determinants. Moreover, extant academic literature fails to resolve the direction of causality between inflation and interest rates. Nevertheless, the prevalent adoption of interest rate-based monetary policies in numerous developing economies raises a fundamental inquiry: What motivates central banks in these nations to consistently espouse this strategy? To address this inquiry, our study leverages wavelet transformation to dissect interest rate and inflation data across a spectrum of frequency scales. This innovative methodology paves the way for a meticulous exploration of the intricate causal interplay between these pivotal macroeconomic variables for twenty-two developing economies using monthly data from 1992 to 2022. Traditional literature on causality tends to focus on short- and long-run timescales, yet our study posits that numerous uncharted time and frequency scales exist between these extremes. These intermediate scales may wield substantial influence over the causal relationship and its direction. Our research thus extends the boundaries of existing causality literature and presents fresh insights into the complexities of monetary policy in developing economies. Traditional wisdom suggests that central banks should raise interest rates to combat inflation. However, our study uncovers a contrasting reality in developing economies. It demonstrates a positive causal link between the policy rate and inflation, where an increase in the central bank’s interest rates leads to an upsurge in price levels. Paradoxically, in response to escalating prices, the central bank continues to heighten the policy rate, thereby perpetuating this cyclical pattern. Given this observed positive causal relationship in developing economies, central banks must explore structural and supply-side factors to break this cycle and regain control over inflation.

According to a survey conducted between July 9 and July 11, 2022, 45 percent of Americans thought that Joe Biden was highly responsible for the current trend in the inflation rate. This is compared to 26 percent of Americans who said President Biden did not have a lot of responsibility for the current inflation rate.

Inflation in the U.S. Global events in 2022 had a significant impact on the United States. Inflation rose from 1.4 percent in January 2021 to 9.1 percent in June 2022. Significantly higher prices of basic goods led to increased concern over the state of the economy, and the ability to cover increasing monthly costs with the same income. Low interest rates, COVID-19-related supply constraints, corporate profiteering, and strong consumer spending had already put pressure on prices before Russia’s invasion of Ukraine in February 2022. Despite rising wages on paper, the rapid growth of consumer prices resulted in an overall decline in real hourly earnings in the first half of 2022.

How much control does Joe Biden have over inflation? The bulk of economic performance and the inflation rate is determined by factors outside the President’s direct control, but U.S. presidents are often held accountable for it. Some of those factors are market forces, private business, productivity growth, the state of the global economy, and policies of the Federal Reserve. Although high-spending decisions such as the 2021 COVID-19 relief bill may have contributed to rising inflation rates, the bill has been seen by economists as a necessary intervention for preventing a recession at the time, as well as being of significant importance to low-income workers impacted by the pandemic.

The most important tool for curbing inflation and controlling the U.S. economy is the Federal Reserve. The Reserve has the ability to set, raise, and lower interest rates and determine the wider monetary policy for the United States – something out of the president’s control. In June 2022, the Reserve announced it would raise interest rates 0.75 percent for the second time that year – hoisting the rate to a target range of 2.25 to 2.5 percent – in an attempt to slow consumer demand and balance demand with supply. However, it can often take time before the impacts of interventions by the Federal Reserve are seen in the public’s day-to-day lives. Most economists expect this wave of inflation to pass in a year to 18 months.

The Volcker Shock was a period of historically high interest rates precipitated by Federal Reserve Chairperson Paul Volcker's decision to raise the central bank's key interest rate, the Fed funds effective rate, during the first three years of his term. Volcker was appointed chairperson of the Fed in August 1979 by President Jimmy Carter, as replacement for William Miller, who Carter had made his treasury secretary. Volcker was one of the most hawkish (supportive of tighter monetary policy to stem inflation) members of the Federal Reserve's committee, and quickly set about changing the course of monetary policy in the U.S. in order to quell inflation. The Volcker Shock is remembered for bringing an end to over a decade of high inflation in the United States, prompting a deep recession and high unemployment, and for spurring on debt defaults among developing countries in Latin America who had borrowed in U.S. dollars.

Monetary tightening and the recessions of the early '80s

Beginning in October 1979, Volcker's Fed tightened monetary policy by raising interest rates. This decision had the effect of depressing demand and slowing down the U.S. economy, as credit became more expensive for households and businesses. The Fed funds rate, the key overnight rate at which banks lend their excess reserves to each other, rose as high as 17.6 percent in early 1980. The rate was allowed to fall back below 10 percent following this first peak, however, due to worries that inflation was not falling fast enough, a second cycle of monetary tightening was embarked upon starting in August of 1980. The rate would reach its all-time peak in June of 1981, at 19.1 percent. The second recession sparked by these hikes was far deeper than the 1980 recession, with unemployment peaking at 10.8 percent in December 1980, the highest level since The Great Depression. This recession would drive inflation to a low point during Volcker's terms of 2.5 percent in August 1983.

The legacy of the Volcker Shock

By the end of Volcker's terms as Fed Chair, inflation was at a manageable rate of around four percent, while unemployment had fallen under six percent, as the economy grew and business confidence returned. While supporters of Volcker's actions point to these numbers as proof of the efficacy of his actions, critics have claimed that there were less harmful ways that inflation could have been brought under control. The recessions of the early 1980s are cited as accelerating deindustrialization in the U.S., as manufacturing jobs lost in 'rust belt' states such as Michigan, Ohio, and Pennsylvania never returned during the years of recovery. The Volcker Shock was also a driving factor behind the Latin American debt crises of the 1980s, as governments in the region defaulted on debts which they had incurred in U.S. dollars. Debates about the validity of using interest rate hikes to get inflation under control have recently re-emerged due to the inflationary pressures facing the U.S. following the Coronavirus pandemic and the Federal Reserve's subsequent decision to embark on a course of monetary tightening.

ABSTRACT Existing interest rates imply explosive debt dynamics for Brazil. It also faces rising inflation from earlier currency depreciations, which could trigger future depreciation. These conditions impose a policy contradiction. Brazil needs lower interest rates for debt sustainability, but tight monetary policy to avoid exchange rate depreciation and inflation. The paper develops a strategy to escape this contradiction. Policy must bolster investor confidence to lower external interest rates, lower domestic interest rates to reduce debt service burdens, and implement domestic credit creation controls to control inflation.

Nigeria’s inflation has been higher than the average for African and Sub-Saharan countries for years now, and even exceeded 16 percent in 2017 – and a real, significant decrease is nowhere in sight. The bigger problem is its unsteadiness, however: An inflation rate that is bouncing all over the place, like this one, is usually a sign of a struggling economy, causing prices to fluctuate, and unemployment and poverty to increase. Nigeria’s economy - a so-called “mixed economy”, which means the market economy is at least in part regulated by the state – is not entirely in bad shape, though. More than half of its GDP is generated by the services sector, namely telecommunications and finances, and the country derives a significant share of its state revenues from oil.

Because it got high

To simplify: When the inflation rate rises, so do prices, and consequently banks raise their interest rates as well to cope and maintain their profit margin. Higher interest rates often cause unemployment to rise. In certain scenarios, rising prices can also mean more panicky spending and consumption among end users, causing debt and poverty. The extreme version of this is called hyperinflation: A rapid increase of prices that is out of control and leads to bankruptcies en masse, devaluation of money and subsequently a currency reform, among other things. But does that mean that low inflation is better? Maybe, but only to a certain degree; the ECB, for example, aspires to maintain an inflation rate of about two percent so as to keep the economy stable. As soon as we reach deflation territory, however, things are starting to look grim again. The best course is a stable inflation rate, to avoid uncertainty and rash actions.

Nigeria today

Nigeria is one of the countries with the largest populations worldwide and also the largest economy in Africa, with its economy growing rapidly after a slump in the aforementioned year 2017. It is slated to be one of the countries with the highest economic growth over the next few decades. Demographic key indicators, like infant mortality rate, fertility rate, and the median age of the population, all point towards a bright future. Additionally, the country seems to make big leaps forward in manufacturing and technological developments, and boasts huge natural resources, including natural gas. All in all, Nigeria and its inflation seem to be on the upswing – or on the path to stabilization, as it were.

The Consumer Price Index gauges the price changes in a basket of goods and services in a defined time period. In Argentina, the CPI in April 2024 was 289 percent higher than the one registered the same month of the previous year, with this figure being the largest monthly inflation rate since, at least, the beginning of 2018. The Argentinian inflation rate has been experiencing a steep increase from December 2020 onwards, when the decreasing trend witnessed since December 2019 came to an end. Long history of inflation in Latin America High inflation rates are nothing new in Latin America. In 2023, the region's inflation rate was 14.41 percent, while the global average was much lower at 6.78 percent. Nonetheless, the main drivers of this are Venezuela and Argentina, both being in the upper table of countries with the highest inflation rates in the world. During the last few years, Venezuela entered a period with five-digits inflation rates, having to issue a new currency and implementing new policies to control price increases.

A history of hyperinflation During the last couple of years, inflation has been a constant among the main problems the Argentine society faces. The country returned to a three-digit inflation rate with former president Alberto Fernández, and the constant price increases took a toll on households across the board. Nevertheless, the problem is far from a recent one or the worst it's ever been, in 1989 and 1990, the inflation rate was over 2,000 percent, reaching for the status of hyperinflation. Commonly, hyperinflation is defined as price increases with over 50 percent per month.

In response to a pre-budget survey conducted across India in 2022, ** percent of the participants agreed there was an urgent need for the government to adopt measures to regulate the prices of commodities and utilities such as food, electricity, and fuel in the union budget for that year. With an increase in unemployment and job loss during the pandemic, prices of such essentials saw a massive spike and resulted in reduced consumption among several Indian households.