Adam S. Posen (PIIE)
via The Hill
The Federal Reserve predicts that this year’s inflation spike is transitory and will soon decline once shortages ease. This is overly optimistic. Labor market and supply chain adjustment will take longer, so inflation will persist. But the Fed should not overreact and raise interest rates prematurely, even if inflation overshoots their forecasts.
The Peterson Institute for International Economics building is closed to staff and visitors until further notice. PIIE personnel are working remotely, with access to telephone messages.