Comments from Evans:
- Burst of higher inflation now will give way to lower numbers ahead; watching expectations will be key
- Supply shocks are a big part of current high inflation readings
- There's no way to sugarcoat the way higher prices are affecting people
He makes a good point about higher prices leading to lower prices. Used auto prices are going to come down so that spike will be a deflationary in the future. Will that be the same with everything? Will those spikes lead to higher wages? That's the much tougher question answer.
From my perspective, I'm impressed by how quickly the market has turned to inflation as the main theme from China. Just a week ago every headline was about Evergrande.
Inflation has a way of getting people nervous. I guess that's what happens when you spend 15 years building a an epic bond bubble.
More from Evans
- We have to always be trying hard to get inflation at 2%
- He take seriously the concerns of those worried about higher inflation
- Dual mandate has served as well; allows the Fed to make a quick monetary policy responses
- Could be that inflation is not that responsive to the labor market
