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nytimes – May 2021 consumer price index shows fastest inflation since 2008

The discussion could shape the way forward for economic policy, help determine the support President Biden has for infrastructure spending proposals, and how patient the Fed can be in removing emergency policy supports. monetary.

“This is the biggest year-over-year price increase since the Great Recession, and massive stimulus spending is a contributing factor,” Idaho Republican Senator Mike Crapo wrote. on Twitter. “Additional federal spending proposals, coupled with job-damaging tax hikes, are not the cure for economic recovery.”

The White House has focused on reducing bottlenecks where it can, examining the supply chain for critical semiconductors and minerals used in all kinds of products. But much of the responsibility for controlling inflation lies with the Fed.

The data comes less than a week before the central bank’s June meeting, which will give Fed Chairman Jerome H. Powell another opportunity to explain how he and his colleagues plan to meet their two key goals. – stable prices and full employment – in the delicate post-pandemic economic environment.

“The Fed never said how much it expected a reopening spike, but we assume policymakers were surprised by the numbers for the past two months,” wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics , in a note after publication.

The big political question the Fed faces is when and how quickly it will start slowing down its $ 120 billion monthly government guaranteed bond purchases. This policy aims to keep borrowing of all kinds low and to fuel demand, and because it supports stock prices, markets are very careful when central bankers cut it.

Mr Powell and his colleagues have said on several occasions that they must see further “substantial” progress towards maximum employment and stable inflation that hovers around 2% over time before opting out of this policy.

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