{"id":299626,"date":"2021-07-14T18:18:25","date_gmt":"2021-07-14T15:18:25","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/federal-reserve-chair-assures-that-inflation-will-pass\/"},"modified":"2021-07-14T18:18:25","modified_gmt":"2021-07-14T15:18:25","slug":"federal-reserve-chair-assures-that-inflation-will-pass","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/federal-reserve-chair-assures-that-inflation-will-pass\/","title":{"rendered":"#Federal Reserve chair assures that inflation will pass"},"content":{"rendered":"

“#Federal Reserve chair assures that inflation will pass<\/strong>”<\/p>\n

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Federal Reserve Chairman Jerome Powell on Wednesday stuck to his position that inflation is temporary even as new data stoked concerns among Wall Street bigwigs that higher prices could be here to stay.<\/p>\n

\u201cInflation has increased notably and will likely remain elevated in coming months before moderating,\u201d Powell said in prepared testimony that will be delivered later Wednesday before the House Financial Services Committee.<\/p>\n

A strong rebound in demand led by Americans emerging from the pandemic has collided with pandemic-related production bottlenecks and shortages to send prices soaring, Powell said in his testimony, which\u00a0served as\u00a0his mandated semiannual update to Congress on the state of monetary policy and the economy.<\/p>\n

But, he argued, those price increases \u201cshould partially reverse as the effects of the bottlenecks unwind.\u201d<\/p>\n

He added that the latest inflation data app<\/a>ears more severe than it is because the numbers are being compared with those from 12 months ago, when the pandemic had gutted the economy and pushed prices lower. <\/p>\n

Powell has repeated that the current inflationary pressures throughout the economy are temporary and said that\u2019s why the Fed won\u2019t taper its ultra-easy monetary policy.<\/p>\n

\"People
New data stoked concerns on Wall Street that higher prices could be here to stay.<\/figcaption>
Getty Images<\/span><\/figcaption><\/figure>\n

But on Tuesday, the Labor Department announced that its Consumer Price Index, which measures a basket of goods and services as well as energy and food costs, jumped a whopping 5.4 percent in June from a year earlier, the fastest pace in almost 13 years.<\/p>\n

In his testimony before lawmakers Wednesday, Powell\u00a0stressed that much of the recent price pressure is coming from just a few industries that have reason to see temporary\u00a0price\u00a0increases.\u00a0<\/p>\n

Some of those industries include used cars, which surged more than 10 percent from 12 months ago due to a semiconductor shortage, and airline fees, which rose 2.7 percent, as they saw demand rebound last month.<\/p>\n

Multiple members of the House committee pressed him on the current inflation trends.<\/p>\n

\"Blackrock
BlackRock chairman and CEO Larry Fink told CNBC, \u201cI worry about inflation.\u201d<\/figcaption>
South China Morning Post via Getty Images<\/span><\/figcaption><\/figure>\n

\u201cIt\u2019s all kind of the same story. It\u2019s a shortage of semiconductors. There\u2019s also very high demand for various reasons,\u201d Powell said in response to a question from Rep. Madeleine Dean, R-Pa. \u201cIt\u2019s just a perfect storm of high demand and low supply and it should pass. Unless we think there\u2019s gonna be a multi-year, many-year shortage of used cars in the United States, we should look at this as temporary. We very much think that it is.\u201d<\/p>\n

Powell also emphasized that it\u2019s important the Fed not react to inflation if it is in fact temporary because overreacting could cause other economic consequences.\u00a0<\/p>\n

\u201cYou wouldn\u2019t react to something that is likely to go away,\u201d he said.<\/p>\n

\u201cThe incoming inflation data have been higher than expected and hoped for, but they\u2019re actually still consistent with what we\u2019ve been talking about,\u201d he added, with inflation coming from a \u201csmall group of goods and services that are directly tied to the reopening of the economy.\u201d<\/p>\n

\"JP
JP Morgan CEO Jamie Dimon believes inflation will be \u201ca little bit worse than what the Fed thinks. I don\u2019t think it\u2019s only temporary.\u201d<\/figcaption>
POOL\/AFP via Getty Images<\/span><\/figcaption><\/figure>\n

But other price hikes, such as housing, which rose 2.6 percent from a year ago, could be signs that the inflationary prices are creeping into parts of the economy where rising costs might not be able to reverse. <\/p>\n

And a separate inflation measure released Wednesday, the Producer Price Index, which tracks the wholesale prices of goods and services, bolstered inflation concerns. It increased a record 7.3 percent in June from a year earlier, higher than expected.<\/p>\n

That has some on Wall Street concerned that inflation isn\u2019t going anywhere. <\/p>\n

\u201cI worry about inflation. I do not believe inflation is going to be transitory,\u201d BlackRock\u00a0CEO Larry Fink told CNBC<\/a> on Wednesday. Instead, he said, \u201cIt\u2019s going to be more systematic over time.\u201d <\/p>\n

\u201cHow the Federal Reserve and how other central banks navigate that is going to be very important,\u201d he added.<\/p>\n

\"Goldman
Goldman Sachs CEO David Solomon said there was \u201cno question\u201d about the sharp increase in costs.<\/figcaption>
Getty Images<\/span><\/figcaption><\/figure>\n

Jamie Dimon, CEO of JPMorgan Chase, questioned the Fed\u2019s take on inflation, too.<\/p>\n

\u201cInflation could be worse than people think. I think it\u2019ll be a little bit worse than what the Fed thinks. I don\u2019t think it\u2019s only temporary,\u201d he said on the bank\u2019s post-earnings conference call with investors Tuesday.<\/p>\n

Goldman Sachs CEO David Solomon added that there\u2019s \u201cno question\u201d inflation has ticked up.<\/p>\n

And Steven Mnuchin, who served as Treasury secretary under former President Donald Trump, on Wednesday didn\u2019t mince words. <\/p>\n

\"Former
\u201cThe Fed has to normalize,\u201d former Treasury Secretary Steve Mnuchin insisted.<\/figcaption>
POOL\/AFP via Getty Images<\/span><\/figcaption><\/figure>\n

\u201cI respectfully disagree with him on his not being concerned,\u201d Mnuchin told CNBC<\/a>, speaking about Powell and inflation. \u201cIt\u2019s important for the Fed to get ahead of the curve so that we don\u2019t end up with 4 percent or 5 percent interest rates \u2026 the Fed has to normalize.\u201d<\/p>\n

Various consumer goods companies have also told investors recently that they see some further price hikes coming in the next few months. <\/p>\n

Hugh Johnston, PepsiCo\u2019s CFO, said Tuesday that the food and beverage giant will likely raise prices soon. <\/p>\n

\u201cIs there somewhat more inflationary pressures out there? There is,\u201d he said. \u201cAre we going to be pricing to deal with it? We certainly are.\u201d\n <\/p><\/div>\n