A period of high inflation in the United States may last longer than anticipated, two U.S. Federal Reserve officials admitted on Wednesday, just a day after Fed Chair Jerome Powell continued to play down soaring prices.
The admissions follow data showing inflation hit 5 percent in May, the highest annual rate since 2008, putting pressure on the Fed to raise interest rates and stop flooding the economy with money through bond purchases.
From the cereal maker General Mills to Chipotle Mexican Grill and paint maker Sherwin-Williams, a range of companies have been jacking up prices, in some cases to make up for higher wages that they're now paying to keep or attract workers.
Atlanta Fed President Raphael Bostic said with growth surging to an estimated 7 percent this year and inflation well above the Fed's 2 percent target, he now expects near-zero interest rates will need to rise in late 2022.
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Fed Chair Jerome Powell continued to play down soaring prices, but other officials say that the inflation trend could persist
'Given the upside surprise in recent data points I pulled forward my projection,' Bostic said, placing him among seven Fed policymakers who at the central bank's meeting last week projected the overnight policy rate may need to lift from the current near zero level sometime next year.
That marked a decisive shift from the end of 2020, when 12 Fed policymakers felt that crisis levels of interest rates would need to remain in place into 2024.
Both Bostic and Fed Governor Michelle Bowman on Wednesday said that while they largely agree recent price increases will prove temporary, they also feel it may take longer than anticipated for them to fade.
'Temporary is going to be a little longer than we expected initially ... Rather than it being two to three months it may be six to nine months,' Bostic said in an interview on National Public Radio's 'Morning Edition.'
Prices for goods like lumber and used cars have pushed some measures of inflation to multi-year highs, with the consumer price index showing a 5 percent annualized increase in May, the fastest since 2008.
Atlanta Fed President Raphael Bostic and Fed Governor Michelle Bowman on Wednesday said that it may take longer than anticipated for high inflation to fadeInsurance Loans Mortgage Attorney Credit Lawyer