> the "transient" camp was correct. I think this is now unprovable. "Transient" and "transitory" were never given a precise definition by the central bankers w

> the "transient" camp was correct. I think this is now unprovable. "Transient" and "transitory" were never given a precise definition by the central bankers who began using those terms, but when around 2021 when the term was being used by the Fed, it was used in context to refer to inflation that returns to target by itself, without requiring a hawkish policy intervention by the Fed. As the Fed has now strongly intervened, it's almost impossible to investigate the counterfactual of whether inflation would have returned to 2% without their having done so. > Federal Reserve Chair Jerome Powell suggested Thursday that inflation will pick up in the coming months but that it would likely prove temporary and not enough for the Fed to alter its record-low interest rate policies.[...] “We think our current policy stance is appropriate,” Powell said.[...] Once price declines that occurred about a year ago when the pandemic began are removed from the year-over-year calculations, inflation will temporarily rise. But the Fed won’t see either of those trends as worrisome increases that would force them to change their policies, Powell said. “If we do see what we believe is likely a transitory increase in inflation, where longer-term inflation expectations are broadly stable, I expect that we will be patient” about making any changes, he said. Higher inflation is unlikely to persist, Powell said, because most consumers and businesses expect mild prices gains, and therefore will keep their prices and wage demands in check. [1] (March 4, 2021) > Powell: "Overall inflation remains below our 2 percent longer run objective. Over the next few months, 12 month measures of inflation will move up as the very low readings from March and April of last year fall out of the calculation. Beyond these base effects, we could also see upward pressure on prices if spending rebounds quickly as the economy continues to reopen, particularly if supply belt bottlenecks limit how quickly production can respond in the near term. However, these one-time increases in prices are likely to have only transient effects on inflation. The median inflation projection of FOMC participants is 2.4% this year and declines to 2% next year before moving back up by the end of 2023.[...] With inflation running persistently below 2% we will aim to achieve inflation moderately above 2% for some time so that inflation averages 2% over time and longer term inflation expectations remain well anchored at 2%. We expect to maintain an accommodative stance of monetary policy until these employment and inflation outcomes are achieved. With regard to interest rates, we continue to expect it will be appropriate to maintain the current 0 to 1/4% target range for the federal funds rate until the labor market conditions have reached levels consistent with the committee's assessment of maximum employment and inflation has risen to 2% and is on track to exceed 2% for some time. I would note that a transitory rise in inflation above 2%, as seems likely to occur this year, would not meet this standard." [2] (March 17, 2021) > Powell, however, downplayed concerns that these trends could trigger sustained high inflation. He said he expects supply bottlenecks to cause only temporary price increases. “An episode of one-time price increases as the economy reopens is not likely to lead to persistent year-over-year inflation into the future,” he said. Clogged supply chains won’t affect Fed policy, Powell said, because “they’re temporary and expected to resolve themselves.” [3] (April 28, 2021) > While much of Wall Street is ringing alarms about out-of-control inflation, Federal Reserve Chair Jerome Powell and his colleagues are expressing confidence in a more benign outlook. Acceleration in U.S. price growth this year will have “only transitory effects on underlying inflation,” Fed Vice Chair Richard Clarida said Wednesday, playing down that consumer prices climbed in April by the most since 2009. Governor Lael Brainard said the day before that officials should be “patient though the transitory surge.” Powell has made the same argument. While policy makers expect the Fed’s preferred measure of inflation to rise to around 2.4 per cent this year as the economy reopens and the pandemic recedes, they forecast it to return to their 2% goal for 2022. [4] (May 13, 2021) [1] https://apnews.com/article/powell-higher-inflation-temporary-no-rate-hikes-28b91e4779c7b45b63d9d4a7d123d0cf https://apnews.com/article/powell-higher-inflation-temporary... [2] https://www.bloomberg.com/news/videos/2021-03-17/fed-s-powell-sees-uneven-recovery-short-lived-inflation-video https://www.bloomberg.com/news/videos/2021-03-17/fed-s-powel... [3] https://apnews.com/article/financial-markets-health-coronavirus-economy-inflation-bbe992c9352a72f189ffd634fe7c9383 https://apnews.com/article/financial-markets-health-coronavi... [4] https://www.bnnbloomberg.ca/fed-leaders-are-confident-inflation-is-transitory-here-s-why-1.1603170 https://www.bnnbloomberg.ca/fed-leaders-are-confident-inflat...