Fed staff forecasts show little concern about rising inflation

Spark Global Limited reports:

On inflation, the Fed’s team of economists, with more than 400 PHDS, has a message for policymakers and the American public: calm down.

While some Fed officials have publicly expressed concern about rising prices and Wall Street has raised its inflation forecasts, the Fed’s staff in Washington expects inflation to return to below 2% in 2022, according to minutes of the Federal Open Market Committee meeting released on October 13.

In addition to being below the FOMC’s 2 per cent long-term target, this forecast is less than half the 4.3 per cent annual rise in the Fed’s preferred inflation measure in August.

Donald Bostick, president of the Federal Reserve Bank of America, said he had banned the word “transitory” because the rise in inflation had not proved as short-lived as expected. Stephen Stanley, chief economist at Amherst Pierpont Securities, has warned that the Fed’s continued monetary stimulus is like pouring gasoline on a fire. He think:

“The Fed staff is overly optimistic.”