But this pace may no longer be relevant, Powell suggested.
“We will discuss increasing the clutch speed,” at the upcoming December meeting, he added. The central bank will release and update its policies on December 15.
Until then, economists – at the Fed and elsewhere – will have a different view of the US labor market, with the November jobs report due on Friday. And the public may also know more about the new Omicron variant of the coronavirus.
It’s about learning about transmissibility, the ability of existing vaccines to work against it, and about the severity of illness if acquired, Powell said.
“Then and only then can we make an assessment of the impact on the economy,” he added.
Stop saying ‘temporary’
“Overall, the higher prices we’re seeing can be traced back to the pandemic,” Powell said. But gains are now broader and upward pressure on inflation is no longer isolated, he added.
But speaking of inflation, Powell made another big statement: Stop using the word “transient,” one of the pandemic buzzwords to describe inflation.
The Federal Reserve uses “transient” to describe the jump in prices during Covid, which the central bank believes is temporary. While it may sound like it’s short-term for the moment, the price has been rising for a while.
The traditional meaning of “transient” is not what the Fed thinks it means at all. According to the central bank, temporary means it won’t leave any mark on the economy once the trend reverses again…whenever possible.
“Everything is temporary. Life is temporary,” Senator Pat Toomey of Pennsylvania said during Tuesday’s hearing.
“Perhaps this is a good time to step back from that and explain what we mean,” said Fed Chairman Jerome Powell.