MNI BRIEF: Inflation Could Run Above 2%​ in '22: Fed's Clarida

U.S. inflation could run above 2% in 2022 and 2023 but that would be consistent with the Fed's recent move to average inflation targeting. Federal Reserve Vice Chair Richard Clarida said Thursday.

"Over the next few months, 12-month measures of inflation are expected to move temporarily above our 2 percent longer-run goal, owing to a run of year-over-year comparisons with depressed service-sector prices recorded in the spring of 2020 and supply bottlenecks limiting how quickly production can respond in the near term," he told an Institute of International Finance forum. "However, I expect most of this increase to be transitory and for inflation to return to -- or perhaps run somewhat above -- our 2 percent longer-run goal in 2022 and 2023."

MNI has reported that fears are growing in Fed circles that a mix of ultra-loose monetary policy combined with a surge in the budget deficit will generate an unwanted inflation spike to which the central bank may fail to respond in time.