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Jon Bal
Jan 14, 2021 6:19PM ET
so what will the black swan be
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Powell Downplays Risk of Runaway Inflation Post-Pandemic
Published Jan 14, 2021 01:10PM ET
© Reuters.
By Yasin Ebrahim
Investing.com – Federal Reserve Chairman Jerome Powell said Thursday, the central bank would allow the labor market to run hot and inflation to move above its 2% target over time, reaffirming market expectations that the central bank is in no rush to raise rates.
Powell acknowledged the potential of pent-up consumer demand boosting inflation as the pandemic recedes, but downplayed the risk of runaway inflation, indicating the post-pandemic inflation pick up will likely be a one-off.
“The real question is, how large is that effect [post-pandemic rise in prices] is going to be and will it be persistent … clearly a one time increase in prices is very unlikely to meet persistently high inflation,” Powell said Thursday during a virtual event sponsored by Princeton's Bendheim Center for Finance.
Inflation would “need to average 2% over time” to be anchored to the central bank’s target, he added.
The Fed Chair said the labor market would be allowed to run hot, without prompting the need to rein in easing monetary policy measures, highlighting once again that inflation will continue to lead the central bank's policy decisions.
“If the rate of unemployment were to be well below our current estimates of the natural rate of unemployment that wouldn't be a reason to raise interest rates, unless we see troubling inflation or other imbalances that could threaten the achievement our mandate,” Powell said.
Powell's remarks come just a day after Fed Vice Chairman Richard Clarida said the central bank won't raise rates until inflation reaches 2%.
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Comments (21)
Joel Schwartz
Jan 14, 2021 6:14PM ET
RAISE RATES YOU (FULL RANGE OF) TOOL
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GamerTurtle
Jan 14, 2021 6:13PM ET
everyone following the path of japan, negative rate, staggering wage with long hour with unpaid OT, deflation, and constant printing. easy for japanese to issue at negative rate and buy US bonds with debt but whom do US buy from when it goes to negative.
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Pray LittleBear
Jan 14, 2021 6:13PM ET
China?
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Bobster Bambino
Jan 14, 2021 6:10PM ET
Raise rates punk. The vaccine is out
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Rodolfo Barraco
Jan 14, 2021 5:51PM ET
Inflation, the most pervasive and regresive tax. Everyone pays it, poors pay it the most, goberment needs it to pay for the paychecks
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Sol Weinberg
Jan 14, 2021 5:17PM ET
Of course he would. They worship at the altar of inflation. To them its never enough. Now they are convincing us that we need higher than 2% "price stability" lol
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Horde NotTrade
Jan 14, 2021 4:55PM ET
These Zio banksters hate the American people
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Taylor Kaplan
Jan 14, 2021 4:54PM ET
Inflation is low because they dont count stocks in inflation calculations... if they did, numbers would be hyperinflationary. At some point, likely when we lose reserve status, people be forced to liquidate their stocks to chase goods and services.Thats when inflation will kick in.
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amar ranjan
Jan 14, 2021 4:43PM ET
Powell is fool, acted under Trump Pressure.
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ChrisCash
Jan 14, 2021 4:43PM ET
He is no longer under Trump
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Alan Rice
Jan 14, 2021 2:40PM ET
Censors on Investing.com ****
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Henrik
Jan 14, 2021 2:40PM ET
They really need to tune that new auto comment admin service
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