WASHINGTON – U.S. inflation risks being pushed to a permanently higher level if the Federal Reserve does not get the current bout of price increases under control, Atlanta Fed president Raphael Bostic said on Tuesday.
“The mostly pandemic-induced episodic price pressures could grind on long enough to fundamentally alter expectations,” and drive actual inflation higher, Bostic said in an essay published by the Atlanta Fed. While expectations have not risen to critical levels yet he said there was “real danger” if businesses and households begin to act as if higher annual inflation was here to stay, and that warranted higher interest rates.
(Reporting by Howard Schneider)