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Saturday, July 24, 2021

Powell said inflation, although improved, is likely to be moderate

WASHINGTON – Federal Reserve Chair Jerome Powell suggested Wednesday that inflation is rising as the recovery strengthens, “before restraint” is likely to improve in the coming months.

At the same time, Powell hinted at an impending change in the Fed’s ultra-low-rate policy.

Delivering to the House Financial Services Committee later Wednesday, Powell reiterated the long-held view that high inflation over the past few months has been driven significantly by temporary factors, significantly shortening supply and increasing consumer demand epidemic-related business restrictions.

Once these factors become normal, Powell said, inflation should be reduced. Yet the Fed Chair did not reiterate in his testimony the statement he made three weeks ago in front of another House panel that inflation would “fall” to the Fed’s 2% target.

The Fed says it will keep its benchmark short-term rate close to zero until maximum employment is reached and annual inflation exceeds 2% on average for some time. Fed officials have made it clear that they are prepared to evaluate a few years of inflation above the target rather than the average of a few years.

The Fed chair also suggested in its testimony Wednesday that the economy is “still one way” away from what central bank policymakers want to see “further progress at the central level” before they begin reducing their monthly 120 billion monthly bond purchases. These purchases are intended to keep long-term orron acceptance rates low in order to encourage adoption and spending.

Paul’s remarks coincided with an official report on Wednesday showing that wholesale prices – which traders pay – rose .3.3% year-on-year in June, the fastest 12-month profit on record in 2010.

In another sign of sharp inflationary pressures on Tuesday, the government said prices paid by U.S. consumers rose the most in June to 13 years. This was the third month of inflation jumping. Excluding volatile food and fuel spending, so-called core inflation rose to 4.4% in June, the fastest pace since November 1991.

The bulk of consumer price gains were driven by sectors that reflect the reopening of the economy and related supply crises. The rise in the price of used cars jumped by about a third. Prices of hotel rooms, air tickets and car fares also rose significantly

Nation World News Deskhttps://nationworldnews.com
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