The president of the Federal Reserve of the United States (Fed), Jerome Powell, affirmed that while the economy is normalizing, a temporary increase in prices can be seen, but they do not expect permanent inflation.
Powell attended a videoconference event on the global economy as part of the Spring Meetings organized by the International Monetary Fund (IMF) and the World Bank.
Noting that substantial financial support and the rapid advance of vaccination have allowed the economy to return to normal in a very short time, Powell said that monetary policy remains supportive.
Powell said the recovery is incomplete and unstable, there will be a risk of mutation until everyone in the world is vaccinated and economic activity cannot continue safely.
“WE WILL NOT RETURN TO THE SAME ECONOMY”
Reiterating that asset purchases will continue at the current rate until significant progress is made on the Fed’s targets, Powell said that at this point, they are talking about real progress and not looking at forecasts.
Powell called on people to get vaccinated and continue social distancing measures, noting that global vaccination poses a risk to progress.
Fed Chairman Powell said: “We don’t want to have another epidemic. Even if it causes less economic damage and kills fewer people, it will slow down the recovery.” saying.
Powell stressed that the necessary support will be provided to the economy until the recovery is complete, Powell said: “It is also useful to remember that we will not go back to the same economy, this will be a different economy.” found the evaluation.
“THERE IS A DIFFERENCE BETWEEN PRICE INCREASE AND PERMANENT INFLATION”
Powell, who also did inflation assessments, claimed that there is a difference between price increases and permanent inflation.
Stating that the level of inflation is determined by the fundamental dynamics of inflation in the economy, as opposed to supply bottlenecks, Powell said:
“As the economy normalizes again, there will be an increase in demand, maybe there will be bottlenecks, but this is unlikely to change the underlying psychology of inflation. We think there will be upward pressure on prices, it may reflected on consumers in the form of price increases, and this effect will be temporary. “
Powell said they have the tools to intervene in the event of a rise in inflation, but they don’t consider this possibility.
“In the most likely case, you will see temporarily higher prices during this period, but you will not see permanent inflation,” Fed Chairman Powell said. saying.