Federal Reserve Chair Jerome H. Powell said the inflation outlook had deteriorated significantly even before the adverse economic impacts of Russia’s invasion of Ukraine, defying forecasters’ predictions.
Speaking Monday at the National Association for Business Economics’ annual conference in Washington, Powell said forecasters — including those at the U.S. central bank — “widely underestimated” the severity and persistence of supply-chain challenges created by the pandemic and accompanying shutdowns. He said these developments, when combined with strong demand, especially for durable goods, “produced surprisingly high inflation.”
Fed forecasters and others had been expecting inflation to cool in the second half of 2021, as the economy started getting back to normal after vaccines became widely available, Powell said.
