WASHINGTON, D.C. (NBC) – Inflation is rising much faster than the Federal Reserve projected earlier this year.
Federal Reserve Chairman Jerome Powell spoke following Wednesday’s meeting of the policy-making federal open market committee.
Powell says the current inflation spikes are partly due to supply shortages and other temporary pressures on the economy’s swift re-opening from the pandemic.
With more people gradually returning to work, prices on some consumer goods are now rebounding, after tumbling at the outset of the pandemic, including prices for clothing.
Powell said, “The process of reopening the economy is unprecedented as was the shutdown at the onset of the pandemic. As the reopening continues, shifts in demand can be large and rapid and bottlenecks, hiring difficulties and other constraints could continue to limit how quickly supply can adjust, raising the possibility that inflation could turn out to be higher and more persistent than we expect.”
Although the board raised its inflation forecast for this year, Powell says he still sees inflation trending to its 2% goal over the long run. And as expected, officials unanimously left its benchmark short-term borrowing rate anchored near zero.
The Federal Reserve says it will continue to assess the economy’s progress in the coming months and will provide advance notice before announcing any decision to make changes.