October 5, 2021
Jerome Powell, chairman of the Fed, spoke last week at an event organized by the ECB and expressed frustration relating to the US economy's inflationary challenges.
- In Powell's view, the economy's biggest concern is getting people vaccinated and containing the COVID-19 delta variant.
- Supply chain bottlenecks continue to be the largest inflationary pressure, according to Powell.
- Due to these supply constraints, personal consumption expenditure (PCE), the primary inflation index used by the Federal Reserve to determine monetary policy, rose to its highest level in 30 years.
The FOMC raised their inflation estimate from 3% to 3.7%, and Powell said these new levels could continue into 2022. Powell's comments were backed up by both Japan's and the ECB's respective leaders.
FINSUM + Magnifi: Continuing shortages of chips are still a major source of shock to the economy. As long as supply chains remain disrupted, the Fed's unemployment, GDP, and inflationary goals will remain in conflict.
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