Inflation in 2022
Lately, inflation has been a hot topic. Investors are curious to know exactly how much prices have risen in the economy and how long they’ll stay inflated. We’ve heard a lot of discussion about “transitory” inflation, but it seems this transitory inflation is lasting quite a while. Chairman of the Federal Reserve, Jerome Powell, believes inflation will ultimately ease but that the current pressures will last until 2022.
During a panel discussion organized by the European Central Bank, the Fed chairman said that getting people vaccinated and stopping the spread of the delta variant remains the most critical economic policy.
Inflation is currently at its highest level in almost 30 years. As supply chain constraints clear and demand returns to pre-pandemic levels, Powell anticipates current pressures to decline. He predicted that the year 2022 would be “quite a strong year” for the economy.
Officials have recently admitted that the current inflation pressures have not eased as expected by the Federal Reserve. Last week, the Federal Open Market Committee increased its core inflation prediction for 2021 from its June forecast of 3% to 3.7%.
Powell mentioned the current inflation surge is due to supply bottlenecks meeting extremely high demand, and it’s all linked to the economy reopening, which is a process with “a beginning, middle, and end.” However, if the surge doesn’t come to an end, Powell said the Fed is prepared to act.
Do you think the inflation surge will last until 2022, or do you see the surge lasting longer?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
