Don't Worry, The Fed Says The Recent Jump In Inflation Is Transitory

The FOMC met today and promised more easy money labeling the recent inflation jump as transitory.

Fed Will Remain Accommodative

The Federal Reserve Open Market Committee (FOMC) met today and its interest rate policy unchanged.

Key FOMC Points

  • Federal Reserve will use its full range of tools to support the U.S. economy.
  • The COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world. Amid progress on vaccinations and strong policy support, indicators of economic activity and employment have strengthened. The sectors most adversely affected by the pandemic remain weak but have shown improvement. 
  • Inflation has risen, largely reflecting transitory factorsOverall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses. 
  • The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. With inflation running persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2 percent for some time so that inflation averages 2 percent over time and longer‑term inflation expectations remain well-anchored at 2 percent. 
  • The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved

The above snips are from the FOMC Press Release.

Inflation jumped as predicted, and so was the Fed comment about transitory.

Reflections on Transitory

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