WASHINGTON (AP) – Federal Reserve Chair Jerome Powell suggested Wednesday that inflation, which has been surging as the recovery strengthens, “will likely remain elevated in coming months” before “moderating.”
At the same time, Powell signaled no imminent change in the Fed’s ultra-low-interest rate policies.
In written testimony he will deliver later Wednesday to the House Financial Services Committee, Powell reiterated his long-held view that high inflation readings over the past several months have been driven largely by temporary factors, notably supply shortages and rising consumer demand as pandemic-related business restrictions are lifted.
Once such factors normalize, Powell said, inflation should ease. Yet the Fed chair did not repeat in his testimony an assertion he made three weeks ago before another House panel, that inflation would “drop back” to the Fed’s target of 2%.
The Fed has said it will keep its benchmark short-term rate pegged near zero until it believes maximum employment has been reached and annual inflation moderately exceeds 2% for some time. Fed officials have made clear that they are prepared to accept inflation above its target to make up for years of below-average inflation.