United States: Fed official considers it premature to act against inflation again

An official of the American Central Bank (Fed) again estimated Wednesday that inflation was not worrying, and that it would be premature to tighten monetary policy.

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“If our expectation is right and inflation is temporary, it would be unwise to take steps that could slow the recovery prematurely by trying to stay ahead of inflation,”

said Randal Quarles, the one of the vice-presidents of the Fed, during a virtual conference of the Brookings Institution. On the other hand, he assured,

.

Bottlenecks in factories and ports around the world have caused supply difficulties, which are pushing up prices.

This should last at least several months.

And the effect of comparison with spring 2020, when prices plunged in the United States under the effect of the first containment measures, results in even higher inflation.

argued Randal Quarles, citing

.

Concerns for several months

Inflation climbed in April at its highest rate since 2008, to 4.2% year-on-year, according to the CPI index. The Fed uses a measure, the PCE index, whose figure for April will be released on Friday. It thus exceeds the long-term target of 2% that the Fed is aiming for, and has raised concerns for several months. Some officials even believe that it will soon be time to start talking about reducing asset purchases, in order to avoid over-stimulating the economy. But Fed Chairman Jerome Powell and several other officials believe it is still too early, and that this risks slowing the recovery, especially in the labor market. The debate was launched at the last monetary meeting, on April 27 and 28, and should continue during the next one,June 15 and 16.