The U.S. central banking official reiterated similar remarks he made earlier this month, noting that it “looks like it will take longer for us to become confident that inflation is coming down to 2 percent over time.”
The latest Consumer Price Index (CPI) for April is set to come out on Wednesday, May 15. Economists expect prices to clock in at 3.4 percent year-over-year.
Data showed inflation hotter than expected at 3.5 percent year-over-year in March, driven by rising housing and gas prices. Month-over-month inflation in March was up 0.4 percent.
On Tuesday, the Producer Price Index, which measures wholesale prices, also came in above economists’ forecasts in April. Powell called the report “mixed.”
While Powell said that inflation was higher than anyone expected, he also noted the ‘historically fast disinflation last year’ as skyrocketing prices cooled dramatically from its peak.
He credited unwinding of shocks from the coronavirus pandemic as well as the restrictive monetary policy.
Powell said it is unclear whether inflation will be more persistent going forward, claiming they need more data than just the first quarter of the year.
He also said of the higher interest rates “I think that it may be that it takes longer than expected to do its work and bring inflation down.”
But he remains confident they will be able to bring it back down to their target.
Biden has touted inflation cooling over the last year but has acknowledged that there is more work to do. His administration has maintained the importance of an independent Federal Reserve when it comes to setting interest rates.
But on Tuesday, Biden made a false claim about soaring inflation during his time in office in an interview with Yahoo Finance.
“I think inflation has gone slightly up,” Biden said in the interview. He claimed it was at “nine percent when I came in, and it’s now down around 3 percent.”
While inflation hit more than 9 percent during his presidency as the U.S. came out of the pandemic, it was less than two percent – 1.4 percent year-over-year in January 2021 – when he started his presidency.
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Author: Marty Kaufmann
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