Would you like inflation here or there?
For weeks, Federal Reserve Chair Jerome Powell dismissed inflation concerns, despite some of his colleagues warning that inflation could be around the corner. Even with rising Treasury yields, he shunned the very idea that rising price inflation is on the horizon.
Well, he has ostensibly had a change of tune.
According to Powell, inflation could increase once the U.S. economy reopens in the aftermath of the coronavirus pandemic.
“We expect that as the economy reopens and hopefully picks up, we will see inflation move up through base effects,” Powell said during a Wall Street Journal conference. “That could create some upward pressure on prices.”
He dismissed tightening monetary policy and stated that interest rates are not going to normalize because the economy still needs to reach full employment and inflation needs to climb above two percent.
This was not enough for financial markets, with the leading indexes crashing and the Treasury yields rising.
At the time of this writing, the benchmark 10-year yield rose 0.07 percent to 1.54 percent. The 20-year bond advanced 0.062 percent to 2.188 percent, while the 30-year bond jumped 0.06% to 2.311 percent.
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