Fed Chair Powell warned that sky-high inflation could turn permanent. It's the opposite of what he said a year ago.
, the Fed chair cited supply chain bottlenecks and hiring difficulties as some inflation drivers expected to be fleeting.
The Fed has pursued its maximum employment and price stability goals since the 1970s, but doing so today is"a very different exercise than the one that we've had for the last 25 years" when inflation was low, Powell said Wednesday. Uncertainty around what the post-pandemic economy will look like leaves the central bank with little precedent for setting policy, and that's played a significant role in letting inflation reach such dizzying heights, he added.
It remains to be seen which inflationary environment becomes the new global norm. Advanced economies struggled with below-target inflation in the decades leading up to the pandemic. Yet the supply chain tangle and Russia's invasion of Ukraine have exposed just how vulnerable the globalized economy has become.
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