Fed Vice Chair Richard Clarida said in a Bloomberg TV interview that there is a lot of “pent-demand” as well as “pent-up supply” in the economy. Both supply and demand will be in play as the year progresses. The “baseline expectation” is that most of the early rise in inflation this year will “revert by year-end”.
“If inflation at the end of the year has not declined from where it is at the middle of the year might be ‘good evidence’ of inflation that is not transitory,” he added.
Also, Clarida reiterated that “substantial progress is actual progress.” Fed will inform the public about the progresses “as we go through the year”. “We will have ample opportunities as data comes in to inform Fed observers on our progress”, he said.
