Powell asks to forget the term “transitory” for inflation in the US

The threat of a “high and persistent inflation“increased in the United States and Federal Reserve (Fed, central bank) will consider the possibility of withdrawing stimulus more quickly, its head said Tuesday morning, Jerome Powell.

For months, Powell has called the explosion in inflation “transitory”, citing bottlenecks in the supply chain and shortages of goods and workers. However, he told the Senate Banking Committee today that it is time to “withdraw” that term.

The central bank’s benchmark price indicator posted a 5% rise in the 12 months ending in October, well above the Fed’s 2% target.

Clearly, the risk of more persistent inflation has increased, “Powell told lawmakers.

But he said the Fed “will use its tools to make sure higher inflation doesn’t take hold.”

The Fed has already begun to withdraw its stimulus measures put in place to cushion the blow of the pandemic on the economy, but Powell had previously said that authorities could wait to raise prices. interest rates of loans, and argued that supply problems would be resolved in the coming months.

However, at this hearing he suggested that the pace of withdrawal from monthly asset purchases could be accelerated. That would mean that the Fed would be in a position to raise the benchmark interest rate earlier than expected.