Federal Reserve Chair Jerome Powell says inflation will likely pick up in the coming months but the increase will be temporary, and won’t be enough for the Fed to alter its low-interest rate policies.
Powell also said Thursday that the outlook for the economy has improved, after three months of weak job gains, but warned that the economy and job market are still far from fully recovered. As the economy reopens in the coming months with vaccines more widely distributed, many economists expect a spending boom that will stretch available supplies of goods and services.
That additional spending could send prices up in some sectors of the economy.
The news sent stocks tumbling on Thursday as the Dow Jones closed down nearly 400 points.