Minneapolis Federal Reserve Chairman Neil Kashkari said Friday that warnings that US inflation was on the rise did not support any evidence that it was tantamount to “ghost stories.”
Kashkari said that as inflation has been rising since 2008, it will accelerate, forcing the central bank to reduce the brakes by sharply raising its policy interest rate. In an article published on the website of his regional bank.
These theories are like ghost stories because there is no evidence that they are true, but they cannot be refuted, he said.
Some economists are concerned that the consumer price index indicates high inflation.
The CBI has risen 6.3% year-on-year in the last three months, the highest rate since 2008. Excluding food and energy prices, the core CPI rose 5.1%, the highest since 1991. Core products are up 8.1%, the highest since 1982.
In a separate interview Friday, Atlanta Fed President Rafael Postick said the COVID-19 epidemic has created “too much noise” in inflation data.
“From month to month and from quarter to quarter, the components of the CBI show wide fluctuations … so it is difficult to know what signal we are seeing now,” Postick said in an interview with Bloomberg Television.
Analysts say financial markets have not responded much to the central bank’s promise to allow inflation to exceed its target, and that the reason for this is that prices have remained very calm in recent years.
St. Louis Federal Reserve Chairman James Bullard said Friday that Wall Street could test satisfaction with inflation.
“I think you can see higher inflation than there was in the pre-epidemic period. When inflation was very low,” he said.
In a discussion hosted by the Boeing Center for Supply Chain Discovery at the University of Washington in St. Louis, Bullard said there were a number of factors that could push up the price level: a very loose central bank, huge fiscal deficits and disruption pressures given 30%, the annual growth rate is expected.
Kashkari said that if it retreated, high inflation would be a “high class problem” for the central bank.
Because the central bank knows how to deal with high inflation – the central bank has limited tools to combat low inflation.
Kashkari noted that persistent low inflation is posing challenges to advanced economies around the world.
This week, the central bank announced the final stages of its strategy to avoid falling into the quicksand of low inflation.
Step:The last position of the central bank: the war to be powerful
The FOMC said it would keep interest rates close to zero until inflation reached its 2% target until the labor market reached maximum employment, and was “on track to cross the 2% mark for some time to come.”
Kashkari disagreed with the central bank’s new perspective guidance at its policy meeting on Wednesday. He proposed simple language that the FOMC “expects to maintain the target range until core inflation reaches 2% on a stable basis” and defined that the “sustainable basis” in this context would last one year.
Kashkari said his alternative forward guidance was stronger than the accepted statement.
The FOMC, the federal president of Minneapolis, said in his forthcoming guidelines that there was no need to mention employment and that there were risks of underestimating the recession in the labor market.
Under his proposal, he said, “we will only throw up once we have proven that we are in maximum employment because key inflation must hit or exceed 2% on a consistent basis.”