Fed's Powell: Several factors indicate elevated inflation rate remains temporary
Federal Reserve Chairman Jerome Powell revealed on Friday that he was one of the majority of Fed officials who believe the central bank can “taper” or slow down the pace of its bond purchases this year.
In his remarks, Powell was careful not to discuss when the Fed might formally announce the taper. Officials are divided about whether to announce it at their meeting on Sept. 20-21 or wait until November. The Fed chairman also didn’t discuss the pace of the slow down. Here again, officials have differing views.
The Fed has also been holding its benchmark interest rate close to zero since the pandemic first hit the economy in March 2020. “We have much ground to cover to reach maximum employment, and time will tell whether we have reached 2% inflation on a sustainable basis,” he said. The Fed chairman said that the spike in inflation has been caused by a relatively narrow group of goods and services — noting that durable goods alone have contributed about 1 percentage point to headline inflation gains over the past year.In addition, Powell said he saw no evidence of a “wage-price spiral” that might fuel inflation.
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