Harry Wilmerding on March 21, 2022
Federal Reserve Chairman Jerome Powell said Monday that soaring prices have become a concern for the U.S. economy, and he suggested that the central bank may take stricter measures to address growing inflation.
“The labor market is very strong, and inflation is much too high,” Powell said in prepared remarks for the National Association for Business Economics. The Consumer Price Index increased 0.8% in February to 7.9% on a year-over-year basis, the highest level in 40 years.
Powell reiterated the remarks he made after the Federal Open Market Committee’s meeting Wednesday, saying rate hikes will continue until inflation is under control. He did not rule out more aggressive rate hikes than the planned quarter-point move announced after the meeting.
“We will take the necessary steps to ensure a return to price stability,” Powell said in Monday’s speech.
“In particular, if we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so,” he said. “And if we determine that we need to tighten beyond common measures of neutral and into a more restrictive stance, we will do that as well.”
In August 2021, Powell dismissed long-term inflation, saying “elevated readings are likely to prove temporary.”
“Inflation at these levels is, of course, a cause for concern,” he said at the time. “But that concern is tempered by a number of factors that suggest that these elevated readings are likely to prove temporary.”
Powell said Monday that forecasters “widely underestimated” inflated prices, which he attributed to supply chain disruptions and elevated consumer demand coming out of the pandemic.
“Why have forecasts been so far off?” he asked in his speech. “In my view, an important part of the explanation is that forecasters widely underestimated the severity and persistence of supply-side frictions, which, when combined with strong demand, especially for durable goods, produced surprisingly high inflation.”
Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact [email protected]
Content created by The Daily Caller News Foundation is available without charge to any eligible news publisher that can provide a large audience. For licensing opportunities of our original content, please contact email@example.com. Read the full story at the Daily Caller News Foundation