Thursday, 29 Apr 2021 07:24 AM MYT
He highlighted the Fed’s commitment to keep the benchmark lending rate near zero, where it has been since the start of the crisis, and to continue its massive bond buying programme until employment recovers and inflation exceeds the two per cent threshold “for some time.” “An episode of one-time price increases as the economy reopens is not the same thing as, and is not likely to lead to, persistently higher year-over-year inflation,” Powell said in response to a question from AFP.
However, he acknowledged the resolution of supply bottlenecks, which also is contributing to the inflation pressures, is “harder to predict.”Noted Harvard economist and former Treasury secretary Lawrence Summers has been the leading voice flagging concerns about what he sees as the Fed’s complacent attitude towards price increases.
Powell said the current situation is far different from past decades, and these price increases are “not calling for a change in monetary policy, since they’re temporary and expected to resolve themselves.” In addition, the central bank chief noted that in the decade following the 2008-2010 global financial crisis — a time when the Fed’s policy interest rate was mostly near zero — inflation struggled to hit the two per cent target.
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