The numbers are hard to ignore: In March, inflation rose 8.5 percent, a 40-year high, according to the latest reading of the Labor Department's consumer price index (CPI). While economists expect inflation to have peaked in March, it’s likely the Federal Reserve will have to act to cool the economy, which could be both positive and negative for small businesses.
Higher rates could throw cold water on overheated prices in volatile segments, including energy and food, for instance. At the same time, an overreaction from the Fed could kill demand and inadvertently send the country hurtling toward recession. While the latter would indeed tamp down on inflation, it also could imperil the economy's growth and lead to layoffs.