Washington (AP) — Federal Reserve Board Chairman Jerome Powell said Friday that the intertwined supply chain and shortages that have plagued the U.S. economy since this summer will worsen and inflation will continue to rise significantly next year. Stated.
But the Fed isn’t ready to raise benchmark rates yet, he said.
At a virtual conference hosted by the South African Reserve Bank, Powell said there was an increased risk of “longer, longer lasting bottlenecks and therefore higher inflation.”
Powell, like many economists, shortages and rising prices are primarily the result of impacts on pandemic supply lines, with factories in Asia being infected with COVID and dozens of freighters anchored offshore. He said it would be closed temporarily.
He said on Friday that these supply problems are still believed to be resolved over time, but the Fed is wary and will take steps to return inflation to the 2% target if necessary.
“We shouldn’t doubt that we use our tools to bring inflation back to 2%,” he said.
According to the Federal Reserve Board’s recommended gauge, consumer prices rose 4.3% year-on-year in August, the fastest rise in 30 years.
The Federal Reserve Board chairman said he was ready to taper or cut the central bank’s $ 120 billion in monthly bond purchases aimed at lowering long-term interest rates and promoting borrowing and spending. ..
But he added that it was “premature” to raise the Fed’s short-term interest rates. Because the job market needs more time to recover. Powell said there are still five million fewer jobs in the United States than before the pandemic.
“I think we are patient and can allow a recovery to occur and the labor market to recover,” he said.
Powell says inflation risk increases, but the Fed could be a “patient” | WGN Radio 720
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