Fed expects bottlenecks ‘to hold up inflation up longer than we had thought’
29 September 2021 - 21:08Federal Reserve chair Jerome Powell on Wednesday said it was frustrating that supply chain bottlenecks are not improving this deep into the recovery from the recession triggered by the coronavirus, and it appears they will persist into 2022 and continue to prop up inflation.
“It is frustrating to acknowledge that getting people vaccinated and getting Delta under control 18 months later still remains the most important economic policy that we have,” Powell said in response to a question on the US economic outlook. “We see that continuing into next year probably and holding inflation up longer than we had thought,” Powell said. “But ultimately the outlook for next year among my colleagues and me at the Fed for next year is quite a strong year with growth quite above trend and unemployment reaching significantly lower levels than now.”
“This is not the situation that we have faced for a very long time and it is one in which there is a tension between our two objectives. Inflation is high and well above target and yet there appears to be slack in the labour market,” Powell said, an apparent reference to the 1970s bout of US “stagflation” that combined high unemployment and fast-rising prices.
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