UPDATE 1-Fed’s Bostic says pandemic pressures pose risks for long-term inflation expectations

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(further adds to Bostic’s comments)

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October 12 (Businesshala) – US inflation is well above the Federal Reserve’s 2% inflation target and policymakers need to watch carefully to ensure that pandemic-induced pressures don’t dampen long-term inflation expectations, Atlanta Fed Bank President Rafael Bostic said. Tuesday.

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Bostic said he believes many pricing trends will “relax by themselves” due to the pandemic, but cautioned that some disruptions in the supply chain could last longer than initially expected.

“So far, the indicators do not suggest that long-term inflation expectations are dangerously unethical,” he said during a virtual event organized by the Peterson Institute for International Economics. “But contextual pressures can grind to a halt long enough to meet expectations.”

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Bostic, who voted on the Fed’s policy-making committee this year, said he and his staff would stop referring to inflationary pressures as “transient.” He said he thinks inflation is well above the Fed’s 2% target and is likely to remain above 2% “going forward.”

The policy maker said it was time for the Fed to start rolling back the support it had given to the economy during the pandemic. “I believe that the conditions I described argue for the removal of the Committee’s emergency monetary policy stance, which begins with a reduction in monthly asset purchases, as we did last month. discussed in the meeting,” he said.

US consumers’ near-term and medium-term inflation expectations rose again in September to new highs thanks to the survey, which was launched in 2013, Bostic said on Tuesday, following a separate report released by the New York Fed. . However, long-term inflation expectations remain well placed. Here When compared to before the pandemic, according to a blog post published last month by the New York Fed. (Reporting by Jonal Marte; Editing by Andrea Ricci)

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