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Fed officials say 'temporary' inflation surge may last longer than thought
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WASHINGTON – A period of high inflation in the United States may last longer than anticipated, two U.S. Federal Reserve officials said on Wednesday, prompting one to pull forward his views on when the central bank should start raising interest rates.
Atlanta Fed President Raphael Bostic said with growth surging to an estimated 7% this year and inflation well above the Fed's 2% target, he now expects interest rates will need to rise in late 2022.
"Given the upside surprise in recent data points I pulled forward my projection," Bostic said, placing him among seven Fed policymakers who at the central bank's meeting last week projected the overnight policy rate may need to lift from the current near zero level sometime next year.
POWELL SAYS ECONOMY GROWING RAPIDLY, INFLATION UP ‘NOTABLY’
That marked a decisive shift from the end of 2020, when 12 Fed policymakers felt that crisis levels of interest rates would need to remain in place into 2024.
The difference in the meantime: Vaccines that have driven back the spread of the coronavirus, and an economic reopening that has proceeded faster, and driven inflation higher, than Fed officials anticipated.