Fed Vice Chair Randal Quarles said in a speech that, “a significant portion of that recent boost to inflation will be transitory”, and it “will not interfere with the rapid growth driving progress toward the Fed’s maximum-employment goal.” He expected “strong recovery will keep rolling forward”. Nevertheless, “uneven global recovery” and “supply bottlenecks” are two “potential headwinds” for the economy.
Quarles added that, “if my expectations about economic growth, employment, and inflation over the coming months are borne out, however, and especially if they come in stronger than I expect, then, as noted in the minutes of the last FOMC meeting, it will become important for the FOMC to begin discussing our plans to adjust the pace of asset purchases at upcoming meetings.”
However, “the time for discussing a change in the federal funds rate remains in the future. The guidance for the federal funds rate commits to maintain the current rate until labor market conditions are consistent with our goal of maximum employment and inflation not only has reached 2 percent, but also is on track to moderately exceed 2 percent for some time.”
