Inflation Question

[LuFins Dad]

How do rising interest rates combat rent inflation? As the rates rise and the real estate market drastically slows, doesn’t that drive more demand towards renting as opposed to buying? And demand should the rental prices higher… Factor in that many landlords (whether large corporations or private individuals) typically finance the real estate on Variable Rate Loans, which will drive rent prices even further…

Of course, there is a cap as rental rates must stay below the costs to actually purchase, but I don’t see where this leads to an easing of rental prices.

[jon-nyc]

I haven’t thought about it deeply but maybe they just don’t except in very indirect ways, like lowering aggregate demand and therefore employment.

Monetary policy is very blunt and indirect.

[LuFins Dad]

@jon-nyc said in Inflation Question:

I haven’t thought about it deeply but maybe they just don’t except in very indirect ways, like lowering aggregate demand and therefore employment.

Monetary policy is very blunt and indirect.

So more college grads living at home with Mom & Dad is the answer to inflation?

[jon-nyc]

A version of that has always been the complaint.

That’s why the Robert Reich’s of the world prefer price controls and attacking “corporate greed”.