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Q: Isn't it true that a little inflation is good for the economy, getting us away from the zero lower bound?

  • A: I certainly don't have that in mind. We're targeting a moderate overshoot of 2% inflation for some time. We want inflation expectations to be centered on 2%. We feel like they may be a little bit below that. The bigger picture is that would be healthy. This is a different thing. That was the kind of inflation we were thinking about that comes from a very strong labor market and a booming economy maybe.
  • This is something different, driven by the supply side which is not able to handle this big spike in demand that we're seeing as the economy reopens ... all over the world you're seeing the same thing.
  • There's absolutely no sense of panic, My best estimate is this is a shock to the economy that we'll pass through. Forecasters very strongly they see it that way. We are responsible for this, though, so we have to take seriously the risk case, which is that inflation may be more persistent and might move expectations up and might require a response.
  • We don't see that now, but we have to be on the alert for it. And people have to understand and believe that we will react if we need to. And we will.
  • It's not my base case. My base case is that inflation will move back down. We have not at all changed our view. I haven't changed my view that inflation running moderately above 2% is a desirable thing. This is not moderately above 2%. This is well above 2%. It's also not the kind of inflation we were looking for. This is driven by a supply side shock.