Powell Says Fed Has No Red Lines on Inflation

Q: Do you have any red lines on inflation readings, eg a number on core PCE?

- A: It doesn't work that way, inflation measures are always going to be a bit volatile. We expect core and headline PCE to move up because of base effects. And we expect that to go away. We also expect these bottleneck effects to come.

• We don't know how persistent they'll be. We think it's a matter of when they will pass through, not whether they will pass through. But we can't be confident about the exact timing or the size of them. They don't seem especially large at the moment.- This is all about the reopening of the economy.
• That's what's happening. We were in a deep, deep hole a year ago. Now with a lot of help from fiscal policy, some additional help from monetary policy and a great deal of help from vaccination, we're seeing a strong rebound in activity.
• Demand can be spurred with fiscal transfers and savings and people going back to work etc. The supply side will take a little bit of time to adapt. You're seeing some of that. That will happen over a period of time, over coming quarters. You'll see some bottlenecks may be resolved. But the last one may not be resolved for some time.