By Howard Schneider
WASHINGTON, Jun 24 (.) – Inflation may be even stronger in the coming months than Federal Reserve officials expect as the US recovery gains strength in the fall and is followed by a global rebound, St. Louis Fed Chairman James Bullard said Thursday.
That could push the price level beyond what is needed to compensate for inflation that in recent years has fallen below the Fed’s 2% target, and presents a “new risk” that bank officials central will have to consider in the coming months.
“Inflation may surprise even more to the upside as the reopening process continues, beyond the level necessary to simply make up for prior noncompliance,” Bullard said in a filing with the Clayton Chamber of Commerce, near St. Louis. .
This week, Bullard said he is among the members of the Fed who expect interest rates to rise next year.
Faster-than-expected inflation this year and in 2022, he said, will fulfill the Fed’s intention to allow the pace of price increases to exceed the formal 2% target for a time to offset the years in which the price increases. inflation has been too low.
His comments on Thursday suggested concerns about an even bigger inflation shock.
He said there has already been a “substantial” surprise in terms of stronger-than-anticipated economic growth and inflation. As schools reopen in the fall and more countries reopen their economies, “the risk is tangible” that inflation could accelerate more than projected.
“Monetary policy authorities will have to take this new risk into account in the coming months and quarters,” he said.
(Report by Howard Schneider, Edited in Spanish by Manuel Farías)