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Federal Reserve Board sees more persistent inflation risk

The Federal Reserve Board of Governors warned in a speech Wednesday night that there was an increased risk that supply chain disruptions could continue to raise inflation longer than predictors expected.

Monthly inflation should fall from the highs observed in the spring, but “there is still a significant risk that supply-related price pressures may last longer than expected,” South Dakota State University said. Federal Governor Michelle Bowman said in a statement prepared for delivery in.Brookings, South Dakota

The Ministry of Labor reported on Wednesday that so-called core prices, excluding the unstable food and energy categories, rose 4% year-on-year, in line with the year-on-year rise reported in August. Year-over-year inflation has risen at the fastest pace in 13 years since May.

Bowman also added to the potential inflationary pressure that employers work despite a decline in the number of Americans looking for jobs and higher wages and other benefits. He mentioned that it is difficult to hire people.

“Employers are having a hard time getting the job done,” she said. “It is clear that such a long outage of economic activity has had lasting consequences, and expectations for a smooth resumption of production, transportation and business operations may not be met for some time.”

Bowman said the slowdown in salary growth witnessed in August and September reflects a limited supply of workers. The increase in the number of people dismissed after being temporarily dismissed last year will make it difficult to fill the employment shortage of about 5 million from February 2020, along with certain challenges faced by small business owners. She said. Said.

“I don’t think employment will soon return to full pre-pandemic levels for several reasons unrelated to monetary policy stance,” she said.

Mr Bowman did not mention her view of potential interest rate hikes in the prepared remarks. She said she supported the Fed’s plans to taper $ 120 billion in monthly bond purchases over a period of approximately eight months starting next month.

“Our asset purchases have been an important part of our response to the economic impact of a pandemic, but they have essentially served that purpose,” she said. Rising asset values, including the housing market, indicate that “the remaining return on the economy from the purchase of assets is likely to outweigh the potential costs.”

Write to Nick Timiraos (nick.timiraos@wsj.com)

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Federal Reserve Board sees more persistent inflation risk

Source link Federal Reserve Board sees more persistent inflation risk

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