Federal Reserve Board Chair Jerome Powell said Tuesday that some inflationary pressures are stronger and more persistent than he expected, although not comparable to some of the worst episodes the United States has seen in history. I admitted that.
Under the question from the special house panel, the leader of the central bank, Recent inflation surge Factors closely related to the resumption of the economy.
Among them, Powell put air tickets, hotel prices and timber a year ago, along with the generally surge in consumer demand that boosted the economy in the face of substantial government restrictions imposed by the government in the early days of Covid-19. I quoted.
He said these factors should be “solved” in the coming months.
“They don’t talk about wide and tight economies or anything that has led to higher inflation over time,” he said. Talked to House Select Subcommittee about the coronavirus crisis.. Powell’s mandated testimony provided up-to-date information on the economy and covered the pandemic-related tools Congress gave to the Federal Reserve during the crisis.
“These effects may turn out to be greater than we expected and more lasting than we expected,” he added. “But the incoming data is very consistent with the view that these are factors that decline over time and inflation is going down towards our goal, and we monitor it carefully.”
Headline price inflation May increased by 5% year-on-year, Highest in almost 13 years, among many other products whose demand is skyrocketing due to soaring used car prices and deregulation.
The latest update on the Fed’s preferred inflation gauge, the leading consumer spending price index, will take place on Friday. Dow Jones estimates that May was up 3.4% year-on-year, up from 3.1% in April. If the estimate is correct, it will be the highest since April 1992.
Republican Commission has repeatedly pressured Powell on whether the economy is heading for hyperinflation when inflation peaks above 10% in the 1970s and early 1980s.
Powell said such a scenario was “very, very unlikely.”
“We believe that what we are seeing now is inflation of certain categories of goods and services that are directly influenced by this unique historical event that no one has ever experienced. “I will.”
He added that the current situation is caused by “very strong demand for labor, goods and services” and “a slight drag on the supply side”. Powell promised that the Fed would be wary of its role.
“You are working on price stability and have a central bank that defines what price stability is and is ready to use that tool to maintain inflation of about 2%,” he said. Told. “All of this suggests to me that episodes like those we saw in the 1970s … don’t think that would happen.”
However, Republicans on the panel pushed back the story of inflation and primarily condemned the Biden administration’s economic policies, which brought upward pressure and potential. Fed may have to raise interest rates..
“If you look only at the two Federal Reserve missions, maximum employment and stable prices, there is neither at this time,” said Steve Scalise. “This is largely due to the Biden administration’s policy decisions.” .. R-La.
But New York Democrat Caroline B. Maloney said he was more worried about the Fed’s rush to react to inflationary pressures. Democrat Maxine Waters also said he wasn’t overly concerned about inflation.
“I’m not really worried about inflation, but I want to monitor it. Let us know what’s happening in our economy,” Waters told Powell.
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“Very, very unlikely” The United States will see 1970s-style inflation
Source link “Very, very unlikely” The United States will see 1970s-style inflation