Fed officials say high inflation weighing on consumers and needs to be controlled
Federal Reserve officials said on Tuesday they are vigilant of the ways that higher inflation can affect U.S. households and dampen consumer sentiment and want to get it under control.
While wages are rising for some workers, consumer sentiment is down to a “level that you might associate with a recession,” said Richmond Fed President Thomas Barkin, citing the consumer sentiment survey from the University of Michigan.
“I think that’s very much because of the impact that prices have on people,” including those who spend a significant part of their pay on food and gas, Barkin said during a virtual panel organized by the Fed.
Atlanta Fed President Raphael Bostic said the central bank aims for low inflation because it doesn’t want households to stress about rising prices. “That’s one of the reasons why, you know, I think you’ve heard from all of us concerns about the higher levels of inflation that we’ve seen recently and the need to get that back under control,” Bostic said.
The Fed this month began to reduce the pace of its monthly asset purchases, the first step in scaling back the support offered to the U.S. economy during the pandemic. Fed officials would like to wind down the bond purchases before they raise interest rates.
Some policymakers say the Fed should be prepared to act in case inflation lasts longer than expected. St. Louis Fed President James Bullard, speaking earlier in the day, said the Fed should “tack in a more hawkish direction” over its next couple of meetings to be prepared in case inflation does not ease.
“If inflation happens to go away we are in great shape for that. If inflation doesn’t go away as quickly as many are currently anticipating it is going to be up to the (Federal Open Market Committee) to keep inflation under control,” Bullard said on Bloomberg Television.
Source: Reuters (Reporting by Jonnelle Marte and Howard Schneider; Editing by Chizu Nomiyama)