The world’s top central bankers see supply chain problems prolonging inflation.


The world’s top central bankers acknowledged that inflation, which has spiked higher across many advanced economies this year, could remain elevated for some time — and that though they still expect it to fade as pandemic-related supply disruptions calm, they are carefully watching to make sure that hot price pressures do not become more permanent.

Jerome H. Powell, the Federal Reserve chair, spoke Wednesday on a panel alongside Christine Lagarde, president of the European Central Bank; Andrew Bailey, governor of the Bank of England; and Haruhiko Kuroda, head of the Bank of Japan.

Mr. Powell noted that while demand was strong in the United States, factory shutdowns and shipping problems were holding back supply, weighing on the economy and pushing inflation above the Fed’s goal of 2 percent on average.

“It is frustrating to acknowledge that getting people vaccinated and getting Delta under control, 18 months later, still remains the most important economic policy that we have,” Mr. Powell said. “It is also frustrating to see the bottlenecks and supply chain problems not getting better — in fact, at the margin, apparently getting a little bit worse.”

“We see that continuing into next year, probably, and holding inflation up longer than we had thought,” Mr. Powell said.

The Fed chair’s comments aligned closely with those of Mr. Bailey and Ms. Lagarde, who also cited uncertainties around persistent supply-chain bottlenecks as a risk.

“We’re back from the brink, but not completely out of the woods,” Ms. Lagarde said of the economic rebound. “We still have uncertainty.”

She said supply-chain disruptions were accelerating in some sectors, while energy price increases were an area to watch, along with potential new waves of the coronavirus pandemic that might be vaccine-resistant.

“Monetary policy can’t solve supply-side shocks,” Mr. Bailey said. “What we have to do is focus on the potential second-round effects from those shortages.”

The joint appearance of some of the world’s most powerful economic officials, sponsored by the European Central Bank, came during a turbulent week in financial markets. While stocks were rebounding on Wednesday morning, they had fallen sharply on Tuesday as government bond yields rose. Investors have been shaken by a political standoff over the debt ceiling in the United States, problems in China’s heavily indebted property sector, the reality that global central banks are preparing to dial back economic support and the possibility that recent rapid price gains might last.

The burst in inflation has swept Europe and the United States this year as consumer demand booms but factory shutdowns and shipping snarls keep many goods in short supply. Central bankers have consistently argued that those price increases will prove temporary. As businesses adjust to the postpandemic recovery, they say, supply-chain kinks will unravel. And while consumers have been spending down savings stockpiled during the pandemic and padded by government stimulus, those will not last forever.

But economic officials have increasingly acknowledged that while they expect the inflationary pop to be temporary, it…



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