Clarida answers questions after his speech
- If contrary to our baseline view, if inflation expectations are pushed up and are persistent, we would not hesitate to act
- It may take longer to reopen a $20 trillion economy than it did to shut it down
- We will need to be attuned to the data and following it closely
- Says he was surprised by today's CPI report but hasn't looked through it in detail
- CPI is one data point, as was the jobs report
- If inflation isn't transitory, we will use our tools to bring inflation under control
- The employment report was a downside surprise
- At 500K jobs per month it would take until Fall 2022 to close jobs gap from pandemic
- I will be watching labor force participation closely
- We need to be humble with forecasts
- I put a lot of weight on inflation surveys but I also look at financial markets
- 5-year, 5-year forward breakevens are below longer-run rates and suggest upward price level pressures are likely to be transitory
- There is a substantial societal benefit to getting to maximum employment
- Sees trade deficit as a 'safety valve' on upward price pressures
- I would take it 'very seriously' if I saw longer term inflation expectations move up
"I was surprised," Fed Vice Chair Clarida said of today's inflation report. "Obviously we have pent-up demand in the economy -- it may take some time for supply to move up to the level of demand."