The Federal Reserve underestimated rampant price inflation as the U.S. economy reopened, Chair Jerome Powell told lawmakers on the House Financial Services Committee on Thursday.
Rep. Ann Wagner (R-Mo.) told Powell that she thinks the head of the central bank “underestimated actual inflation” and asked what monetary policymakers missed.
“We did underestimate it. With the benefit of hindsight, clearly we did,” Powell said during his second day of testimony before Congress.
Powell explained that the central bank misread inflationary problems because officials attributed it to supply constraints, with the thought process being uncertainty surrounding supply chains and workers returning to the labor market after receiving their vaccines. Now, according to Powell, four-decade-high inflation is because of “very strong demand.”…