America’s Federal Reserve Chairman Jerome Powell has to contend with high inflation rates even more than ECB President Christine Lagarde. In August, inflation was 5.3 percent in America and 3 percent in the euro zone. Both hope: it is only temporary.
America’s Federal Reserve Chairman Jerome Powell expects bottlenecks in intermediate products and raw materials to continue into next year. The heads of other central banks also see an upside risk for inflation.
Dhe ongoing supply bottlenecks as a result of the Corona crisis are causing problems for America’s economy longer than expected. The US Federal Reserve Chairman Jerome Powell said this on Wednesday evening in a discussion with three of his most important colleagues from other countries at the ECB’s monetary policy forum. The conference, which otherwise takes place annually in Sintra, Portugal, was held online for the second time.
Powell said the shortages in many precursors and raw materials, which, among other things, slowed the auto industry, are likely to persist into next year. He expects the recent sharp rise in inflation to be above the Fed’s target of two percent in the next few months before it falls. The central bank does not expect inflation to rise over the long term. It is difficult to predict how long this phase will last: “But we expect that we will get through.”
Delivery bottlenecks hit Great Britain particularly hard: Federal Reserve Chairman Andrew Bailey emphasized that global factors such as the consequences of the pandemic and specific consequences of Brexit come together in his country. Christine Lagarde, President of the European Central Bank, called the bottlenecks an upside risk for inflation in the euro zone as well. At the moment, an increase in energy prices compared to the very low levels of the previous year is driving inflation rates. It is expected that this will decrease in 2022. At the moment, the Eurozone economy is out of the valley, but not over the mountain. The Japanese central bank chief Haruhiko Kuroda emphasized that in Japan, in particular, demand was still weak in the wake of the pandemic. But he expects that to change in the next few months.