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  • New York Fed president Williams: My view is that spike in inflation mostly reflects temporary effects of surprisingly rapid opening of the economy
Market news
12.07.2021, 14:16

New York Fed president Williams: My view is that spike in inflation mostly reflects temporary effects of surprisingly rapid opening of the economy

  • Thanks to widespread vaccinations and robust support from fiscal policy, economy is reopening more quickly and more strongly than expected
  • After sharp declines in employment, production, and prices last year, the opposite is now occurring. As a result, we are seeing a record number of job openings, supply bottlenecks in sectors such as autos, and sharp increases in prices for some high-in-demand goods and services
  • I expect inflation-adjusted, or real, GDP to increase 7% this year; if that forecast comes true, that would be the fastest y-o-y growth rate since 1984
  • I cannot stress enough that we still have long way to go to get back to full strength; there are still over seven million fewer jobs today than before the pandemic
  • Recent inflation data have moved up sharply, which has garnered a great deal of attention; my view is that spike in inflation mostly reflects temporary effects of surprisingly rapid opening of the economy
  • I expect that as price reversals and short-run imbalances from the economy reopening play out, inflation will come down from around 3% this year to close to 2% next year and in 2023. It goes without saying that there is a great deal of uncertainty about the inflation outlook, and I will be watching the data closely
  • It’s clear that the economy is improving at rapid rate, and the medium-term outlook is very good. But the data and conditions have not progressed enough for FOMC to shift its monetary policy stance of strong support for economic recovery

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