Inflation Increases Likely to Prove Transitory, Fed Official Says
By Paul Kiernan
WASHINGTON -- U.S. inflation could rise somewhat further in
coming months before moderating later this year, a top Federal
Reserve official said Wednesday, adding that the central bank's
easy-money policies will likely remain unchanged for some time.
Richard Clarida, the Fed's vice chairman, said he anticipates
inflation remaining consistent with the central bank's
inflation-targeting framework adopted last year, notwithstanding a
flurry of factors that could push prices temporarily higher. These
include both statistical effects and supply bottlenecks in some
"These one-time increases in prices are likely to have only
transitory effects on underlying inflation, and I expect inflation
to return to -- or perhaps run somewhat above -- our 2% longer-run
goal in 2022 and 2023," Mr. Clarida said in a speech prepared for
delivery to the National Association for Business Economics
International Symposium. "This outcome would be entirely consistent
with the new framework the Federal Reserve unanimously adopted in
Under that strategy, the Fed aims for annual inflation to
average 2% over time. In the near term, that will mean letting
prices rise faster than 2% a year to make up for lower inflation
over the past decade.
Since last year, the Fed has held overnight interest rates near
zero and purchased at least $120 billion a month of Treasury and
mortgage bonds to smooth the economy's recovery from the recession
caused by the Covid-19 pandemic.
Fed officials reiterated in April their intention to leave rates
unchanged until the economy has achieved the central bank's goals
of full employment and 2% average inflation. They have said since
December they plan to continue buying assets at the current pace
until "substantial further progress" has been made toward those
"The economy remains a long way from our goals, and it is likely
to take some time for substantial further progress to be achieved,"
Mr. Clarida said Wednesday, echoing comments from other Fed
(END) Dow Jones Newswires
May 12, 2021 09:14 ET (13:14 GMT)
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