News & Insights

An Update from the Fed

During the Fed’s annual working vacation last month in Jackson Hole, Wyoming, Chairman Jerome Powell offered his thoughts on inflation and the evolution of Fed policy. While continuing to support the view that much of the inflation we’re seeing is “transitory,” he did make the case for a reduction in market intervention (or “tapering”) as the year comes to a close. He also announced the Fed will continue to hold the target range for the federal funds rate at its current level until the economy reaches maximum employment and sustained 2 percent inflation. Skeptics have pointed out that Powell’s dovish comments may have been an audition for potential reappointment, which was expected over Labor Day weekend, though no announcement has been made.

In his comments, he said he expects supply chain disruptions, burgeoning demand and shortages of labor and supplies to wane over time. Other more hawkish Fed members indicated their concerns that inflation may push well into 2022 and beyond.