Powell Says Current High Inflation Has No Significant Implications For Economy

Q: Can you tell us more about the "learning a lot more in the next six months" about the economy, that you mentioned in your congressional testimony?

• A: Re inflation: we don't just look at the headline number, we look at all the components that go into the calculation. And if you do that, what you see is not that widely across the whole range of goods and services in the economy, we're seeing upward pressure on prices - that's not really what we're seeing. A handful of things really account for the overshoot of inflation.
• That's a big, big part of why the inflation readings are so high. Those frankly don't carry significant implications in the long run for inflation, or for the economy. What we want to see is these other things, do the prices flatten out, do they actually move down.
• If they flatten out, then their contribution to inflation becomes zero over time and are not contributing to inflation. If we start to see that happen fairly widely, we'll know our basic understanding of the situation is broadly correct. I don't think it will take a very long time to see whether that's the case.
• The overall reopening of the economy is going to play out over a period of time. It's not going to happen quickly. It's going to take some time. It's going to be very uneven. But I think we will know when we know. I don't think it will take that long. I don't want to put a number on it, but I do think if we see those things happening we'll know we have the story basically right.