Tom Barkin, Speech: Containing Inflation

Page(s): 4

“To close, I want to talk about what I’ll be keeping an eye on in the coming months: demand, supply and pricing. While I think all three of these areas should normalize, there are still unanswered questions. Demand should calm as rates increase, excess savings are spent, and we work through the current oil price shocks, but how much, how quickly, and in what mix of goods and services? Supply should recover as COVID-19 recedes, supply chains are remediated and workers rejoin the workforce. But how long will this take, and how much upside does the labor force have? And inflation should move toward target as pandemic and geopolitical pressures ease and policy normalizes. But how fast will that happen, and what will be the impact of this period on inflation expectations? These answers will dictate the pace with which we use our tools; put another way, they will provide us with ongoing feedback about how to adjust policy in order to keep inflation expectations anchored and keep inflation on a medium-term path back to our 2 percent target.”