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Flashback: Fed Chair Jerome Powell Says Money Printing Doesn’t Lead to Inflation

‘Inflation dynamics evolve over time but they don’t tend to change overnight ‘

EXCERPT:

POWELL: "You know, there was a time when monetary aggregates were important determinants of inflation. And that has not been the case for a long time. So you'll see if you look back the correlation between movements in different aggregates, you mentioned M2 and -- and inflation is just very, very low. And you see that now where inflation is at 1.4 percent for this year. Inflation dynamics evolve over time, but they don't tend to change overnight. And so we've had -- and I remember, well, I was in college during the 1970s -- I remember well, high inflation and this feeling of powerlessness on the part of anyone to deal with it until finally Paul Volcker did exactly that. And we've been in a low inflation, this inflationary mode ever since. And so what I see is an economy that where there's still a great deal of slack, I see the prospect of really significant progress as we put the pandemic behind us, as we see that data, we've got in place guidance that tells markets clearly when we will begin to taper asset purchases, and when we will begin to raise interest rates, when the when the economy -- in that case when the -- when the expansion is very far advanced. So, we have our tools, we have them in place and we think that this is the appropriate policy stance.”

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