Powell says inflation, though elevated, will likely moderate

Federal Reserve Chair Jerome Powell says that inflation “will likely remain elevated in coming months” before “moderating,” an apparent acknowledgement that price gains have been larger and more persistent than many economists forecast

WASHINGTON -- Federal Reserve Chair Jerome Powell suggested Wednesday that inflation, which has been surging as the recovery strengthens, “will likely remain elevated in coming months" before “moderating." At the same time, Powell signaled no imminent change in the Fed's ultra-low-interest rate policies. In written testimony he will deliver later Wednesday to the House Financial Services Committee, Powell reiterated his long-held view that high inflation readings over the past several months have been driven largely by temporary factors, notably supply shortages and rising consumer demand as pandemic-related business restrictions are lifted. Once such factors normalize, Powell said, inflation should ease. Yet the Fed chair did not repeat in his testimony an assertion he made three weeks ago before another House panel, that inflation would “drop back” to the Fed's target of 2%.