(Corrects attribution in 2nd paragraph to Bloomberg)
WASHINGTON (Reuters) – If an expected jump in inflation this year does not reverse going into 2022 the Fed “will have to take that into account” Federal Reserve vice chair Richard Clarida said Friday.
Strong demand and possible supply bottlenecks are expected to cause prices to surge in coming months above the Fed’s 2% target but “the baseline view…is that most of the move above 2% inflation we see this spring should revert back later this year,” Clarida said on Bloomberg.
Asked how the Fed will know if that view is mistaken, Clarida said “if inflation at the end of the year has not declined from where it is in the middle of the year that will be some good evidence.”
(Reporting by Howard Schneider)
