For months the Federal Reserve has been telling America that they had inflation under control and that it was transitory. Now, Fed governor Michelle Bowman is admitting “that supply-related pricing pressures could last longer than expected.” Nick Timiraos reports for The Wall Street Journal:
A Federal Reserve official warned in a speech Wednesday night of growing risks that supply-chain disruptions could keep inflation elevated for longer than forecasters have anticipated.
While monthly inflation readings should decline from high rates observed in the spring, “I still see a material risk that supply-related pricing pressures could last longer than expected,” said Fed governor Michelle Bowman in remarks prepared for delivery at South Dakota State University in Brookings, S.D.
The Labor Department reported Wednesday that so-called core prices, which exclude volatile food and energy categories, rose 4% in September from a year earlier, matching the year-over-year increase reported in August. On a year-over-year basis, inflation has been rising at the fastest pace in 13 years since May.
Ms. Bowman also cited a drop in the number of Americans looking for work, together with employers’ difficulty recruiting workers despite offering higher wages and other benefits, as factors that added to potential inflationary pressures.
“Employers are having a very tough time filling jobs,” she said. “It is clear that switching off economic activity for such a long period has had lasting consequences, and expectations of a smooth resumption of production, transportation, and business operations may not be met for some time.”
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