The Fed Admits That Inflation is No Longer “Transitory”

Photo by Aaron Burden on Unsplash

This is terrible news.

For the longest time Chairman Jerome Powell dismissed fears that rising inflation had become a mainstay in the U.S economy instead, saying that the high-interest rates were only “transitory.”

It seems as though the Fed was the only entity holding out hope that Powell’s words would ring true because Americans had resigned to acknowledge that a higher inflation rate was here to stay.

On Tuesday, November 30th, Powell had to admit his previous statements were wrong when he made remarks about the term “transitory” during a congressional hearing. Since he had spent months touting that interest rates were transitory, it wasn’t surprising that he wouldn’t withdraw his previous remarks, choosing to say that he would “retire” the term since there was confusion about what it meant. 

Powell said that while many believed the term to mean that higher inflation rates would be short-term, what he meant by the term was that it would not leave a permanent mark “in the form of higher inflation.”

He continued, saying that although it was challenging to predict how long supply chain issues would last, he could agree that inflation would last well into 2022.

Secretary of the Treasury Janet Yellen agreed with Powell’s sentiments, saying she was also ready to retire the term.

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