Admin Quietly Admits Inflation Surge Could Last Years… Fed’s Powell Concedes Anxiety but Resists Policy Shift

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White House quietly signals inflationary run could last years

The White House is sending mixed messages on the United States’s post-pandemic inflationary run, with quiet signals suggesting the period might last years longer than administration officials have publicly indicated.

The Consumer Price Index report for May published by the Bureau of Labor Statistics showed that year-over-year inflation jumped 5.4%, marking three straight months of increases and the single-largest increase since the Great Recession of 2008.

Still, the White House’s Council of Economic Advisers noted roughly 60% of that increase could be attributed to auto industry demand, exacerbated by severe semiconductor shortages.

Fed’s Powell Concedes Anxiety About Higher Inflation but Resists Policy Shift

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Federal Reserve Chairman Jerome Powell said recent inflation was uncomfortably above the levels the central bank seeks, concluding two days of testimony in which he sounded somewhat less confident about the economic outlook—and the Fed’s policy path—than earlier this year.

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More broad-based price pressures or a weak rebound in the workforce could lead the Fed to conclude it needs to reverse the easy money policies it deployed during the pandemic more rapidly than officials expected a few months ago.

“This is a shock going through the system associated with reopening of the economy, and it has driven inflation well above 2%. And of course we’re not comfortable with that,” Mr. Powell told the Senate Banking Committee on Thursday.

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