The Federal Reserve Board of Governors warned in a speech Wednesday night that there was an increased risk that supply chain disruptions could propel inflation longer than forecast.
South Dakota State University said monthly inflation should fall from the highs seen in the spring, but “there is still a significant risk that price pressures related to supply could last longer than expected.” Federal Governor Michelle Bowman said in a statement prepared for the delivery. Brookings, South Dakota
The labor ministry reported on Wednesday that so-called core prices excluding volatile food and energy categories rose 4% year-on-year, in line with the year-on-year increase reported in August. The year-on-year inflation rose at the fastest pace in 13 years since May.
Bowman also added to the potential inflationary pressure that employers employ despite the declining number of Americans seeking jobs and higher wages and other benefits. He said it is difficult to hire people.
“Employers are having a hard time getting things done,” she said. “It is clear that such a prolonged shutdown of economic activity has had lasting consequences, and the expectation of a smooth resumption of production, transport and business operations may not be fulfilled for some time.”
Bowman said the slowdown in wage growth seen in August and September reflects a limited supply of workers. The increase in the number of people fired after being temporarily fired last year will make it difficult to fill the nearly 5 million job shortfall since February 2020, along with some of the challenges facing small business owners. he said. said.
“I don’t think employment will return to full pre-pandemic levels anytime soon for a number of reasons unrelated to the monetary policy stance,” she said.
Mr. Bowman did not mention his view of a possible interest rate hike in prepared remarks. She said she supported the Fed’s plans to reduce $120 billion in monthly bond purchases over a period of about 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 property values, including the housing market, indicate that “the remaining return on the economy from the purchase of the property is likely to outweigh the potential costs.”
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Federal Reserve Board sees more persistent inflation risk
Source link Federal Reserve Board sees more persistent inflation risk