April 8 (Reuters) – Federal Reserve Chair Jerome Powell said Thursday that a surge in spending as the U.S. economy reopens, along with bottlenecks in supply, will likely push prices higher this year, but would not result in the kind of year after year price rises that would constitute inflation.
“We think there will be upward pressure on prices which may be passed along to consumers in the form of price increases – we think that that will be temporary,” Powell said at an International Monetary Fund event, noting that inflation has been low for 25 years, feeding into a psychology of low inflation expectations.
“If inflation were unexpectedly, counter to our expectations, to move meaningfully above levels where we are comfortable – and in particular inflation expectations… if we see them moving persistently and materially above levels we are comfortable with, then we would react to that.” (Reporting by Ann Saphir Editing by Chizu Nomiyama)
