Fed Barkin: Inflation to increase this year and likely to revert back to normal in 2022.

Author: Greg Michalowski | Category: Central Banks

Feds Barkin, Bostic and Kaplan speak at a technology conference


Feds Kaplan Barkan and Bostic
The Fed's Barkin, Bostic and Kaplan are all speaking at a technology conference at the Dallas Feds technology conference

Barkin:
  • Inflation to increase this year and likely to revert back to normal in 2022
  • When we get to substantial further progress, we will taper
  • Believe we are on the backside of this pandemic crisis.
  • Intent to live by our forward guidance
  • The pursuit of productivity is everywhere
  • Businesses don't want to increase prices. They want to increase margins by making productivity changes.
  • We are having turbulence now.  
  • We have a lot more room to run in the labor market
  • You don't stand still but you keep looking at the data and make new judgements. 
Kaplan:
  • Sees a lot of uncertainty about inflation, intends to keep an open mind
  • Repeats that he's concerned about excesses and imbalances in housing market
  • starting to feel differently about the balance between benefits and side effects of the Fed's QE purchases
  • Dont want to act so soon that you choke off the economy, but you also don't want to act so late as well. 
  • There are cyclical elements of inflation which has supply/demand components. There is structural change which is derived from productivity from technology. 
  • The debate around the Fed tables around the balance between preemptive and being too late
  • I would rather gently take foot off the accelerate vs slamming on the brakes later on.
  • Turbulent period will generate unusual data prints on both sides of employment for a little while now
Bostic:
  • Many of the inflationary forces should resolve in months
  • I am going to be data driven one thinking about policy
  • I am monitoring the marketplace, trying to discern between transitory and permanent defined right the time for policy change
  • Cannot say that we are beyond the pandemic. I am not ready to pivot and turn my back on the pandemic
  • Want to see more job creation.
  • Does not worry about inflation getting entrenched
  • Right now inflation the dashboard is not flashing red or suggesting things getting out of control (HERE is the Atlanta Fed INFLATION Dashboard).
  • If see good progress and economy can stand on its own, I'd be in favor of getting to more normalized policy.
  • The changes from technology are only going to accelerate 
Meanwhile 
  • A Dallas Fed survey points two week job growth in May
  • Fed's survey conducted week of May 9 – 15th showed employment and participation rate fell versus April survey

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