Federal Reserve Chairman Jerome Powell on Tuesday informed a Senate committee that “transient” is a word that should be removed when talking about inflation because it suggests that the phenomenon will be “short-lived”.
Asked about his use of the term transient when speaking of inflation by Sen. Pat Toomey (R-Pennsylvania), Powell admitted that the actual definition of the word may not be exactly what he and others have tried to convey. Americans facing record inflation and soaring costs on everything from food to fuel.
“It carries a time, a feeling of [being] of short time,” Powell said of the word in question. “We tend to use it to mean that it won’t leave a permanent mark in the form of higher inflation. I think it’s probably a good time to take that word out and try to make it clear what we mean.
Stock markets took a hit in the wake of Powell’s comments, with the Dow Jones, S&P and Nasdaq indexes all falling more than 1%, scoring 500 and 200 points for the Dow Jones and Nasdaq.
Inflation hit a 30-year high in October, with consumer prices rising 6.2%, which had already followed months of rising costs and inflation of over 5%, as reported by the Department of Labor.
The Fed Chairman said that because consumer market rates have continued to rise, it may be time for the Federal Reserve to change its bond-buying strategy, which is meant to help the economy. to recover, although some have said the Fed’s economic interference has only further contributed to a ballooning market.
“At this point the economy is very strong and inflationary pressures are high and therefore it is appropriate, in my opinion, to consider concluding the reduction in our asset purchases,” he added. he said.
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