At a university lecture appearance, Boston Federal Reserve president Eric Rosengren commented that the rise in inflation will be temporary, similar to the toilet-paper shortage caused by the COVID-19 pandemic.
“My view is that this acceleration in the rate of price increases is likely to prove temporary,” Rosengren said at a Boston College webinar.
“Toilet paper and Clorox were in short supply at the outset of the pandemic, but manufacturers eventually increased supply, and those items are no longer scarce,” he said. “Many of the factors raising prices this spring are also likely to be similarly short-lived.”
Rosengren noted that the Fed struggled to achieve its 2 percent inflation target after the 2008 financial crisis and accompanying recession. The Fed strives to maintain a consistent annual inflation-rate increase to allow consumers and business to form stable expectations around higher prices and incorporate that into their market activity.
The Fed official said he anticipated the inflation rate would hit close to the 2 percent trend and likely go “a little bit higher over the course of this year.”
During the lecture, Rosengren showed diagrams indicating private-sector inflation forecasts for 2021 averaging at 2.3 percent and forecasts for 2022 averaging at 2.0 percent. He noted that the private sector is preparing for inflation to surge this year and then subside in the following years.
Referring to the “ebbs and flows” price changes attributed to supply and demand disequilibriums among oil, shipping costs, consumer goods, etc. during the pandemic, Rosengren said, “I do think a lot of these are temporary shocks that will smooth out over time.”
While Rosengren is confident the inflation rate will fall again, some financial leaders believe it will take off due to runaway government spending.
“We are seeing very substantial inflation,” Warren Buffett, billionaire investor and chairman of Berkshire Hathaway, remarked at his company’s annual shareholder meeting Saturday, according to CNBC. “It’s very interesting. We are raising prices.”
“We’re going to see massive inflation,” Peter Schiff, the chief economist and global strategist of Euro Pacific Capital, reported to the Daily Caller News Foundation (DCNF).
“The 100% cause of inflation is the government,” Schiff told the DCNF. “It’s when the government spends money that it doesn’t collect in taxes and then the Federal Reserve monetizes the resulting deficits by printing money.”