President of the Federal Reserve Bank of Minneapolis Neel Kashkari crossed wires during the weekend, via the CBS News. The Fed policymaker conveyed his inflation outlook and terms it temporary although it causes pain.
The high prices that families are paying, those are real and people are experiencing that pain right now.
We need to take it very seriously, but my view is we also need to not overreact to some of these temporary factors even though the pain is real.
If we overreact to a short-term price increase that can set the economy back over the long term.
Over the next three, six, nine months, I think we're going to get a lot more data on both the demand side and the supply side to get a better reading of where the economy is headed.
So, the sooner we can get this pandemic really under control, the more quickly people will have confidence to go back to work. That will help the economic recovery and that will certainly help bring down inflation.
Although the early Asian session on Monday fails to react to the news, these comments from the Fed official are more or less in line with Treasury Secretary Jannet Yellen’s latest view on Inflation. The same should keep hopes of easy money on the table and favor the US dollar strength.
Read: US Treasury Sec. Yellen: Cause of this inflation is the pandemic
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