Listen: Why The Fed May Be Wrong About Inflation

By Nicholas Mapa of ING Economics

Economic and Financial Analysis • Jun 3, 2021 at 4:57 AM EDT

US inflation is rising at the fastest pace in more than a decade. In this podcast, ING's James Knightley discusses whether recent price rises are likely to be transitory as the Federal Reserve believes, or a more sustained risk to the recovery

US inflation is rising at the fastest pace in more than a decade. Should we be worried? In this podcast, ING's James Knightley discusses whether recent price rises are likely to be transitory as the Federal Reserve believes, or a more sustained risk to the recovery.

Audio Length: 00:15:08

US consumer prices rose in April at the fastest pace in 13 years while the core PCE deflator, a measure of inflation favored by the Federal Reserve, stands at the highest level since 1992. Members of the Federal Reserve say temporary factors are at work and high inflation readings won't be sustained. But others aren't convinced. Larry Summers, former US Treasury Secretary under Bill Clinton and a top economic adviser to President Obama, has accused the central bank of "dangerous complacency" over inflation which could unsettle financial markets. In this podcast, Senior Editor Rebecca Byrne asks Chief International Economist James Knightley where he stands on the issue and what the Fed is likely to do next.

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