Despite the ongoing pandemic that continues, the economy has seen rapid growth despite high inflation and persistent demand imbalances. We all know that high levels of inflation are costly, particularly for those with lower incomes. We are determined to achieve our statutory goals of maximum unemployment and price stability. We will use all our tools to support the economic and strong labor market and to prevent higher inflation from becoming entrenched. So I don’t think we look to get all of the realignment between demand and supply through the demand channel, although we should get some. But at the same time, we do think we’ll get over the course of this year return to normal supply conditions, and that’s going to affect our policy. I will say though, if, if — if we see inflation persisting at high levels longer than expected, then we will, you know, then will if we have to raise interest rates more over time, we will use our tools to get inflation back. And the main reason is this a reason is this that to get the kind of very strong labor market we want with high participation, it’s going to take a long expansion. We can see that participation is moving only very slowly and to get along expansion, we’re going to need price stability. Inflation is a serious threat to our ability to achieve maximum employment and the long-term expansion we can offer.
Source: NY Times
