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Federal Reserve Chairman Jerome Powell still expects inflation to ease eventually, but said Wednesday that he sees the current pressures running into 2022.

Assessing the current economic situation, the Fed chief said during a panel discussion hosted by the European Central Bank that he was “frustrated” that getting people vaccinated and arresting the spread of the Covid delta variant “remains the most important economic policy that we have.”

“It’s also frustrating to see the bottlenecks and supply chain problems not getting better — in fact at the margins apparently getting a little bit worse,” he added. “We see that continuing into next year probably, and holding up inflation longer than we had thought.”

 

·         Powell: "Tension" between jobs, inflation is the chief challenge facing Fed

Resolving “tension” between high inflation and still-elevated unemployment is the most urgent issue facing the Federal Reserve right now, Fed Chair Jerome Powell said Wednesday, acknowledging the central bank’s two goals are in potential conflict.

Powell said the Fed’s working “hypothesis” is that inflation will largely ease on its own as the global economy returns to normal after a rocky reopening from the pandemic, a baseline that lets the Fed chief refer to interest rate increases as still “a ways off.”

But asked about his biggest concerns right now, Powell referred to the possible clash between the Fed’s two goals of stable prices and full employment, a situation that could force the Fed to make trade-offs between the two by raising interest rates to tame prices at a time when it still wants to encourage job growth.