Inflation 'more than transitory' ahead of expensive Thanksgiving: Former Kansas City Fed president
Fed faces tough decisions as inflation remains ‘more than transitory’: Hoenig
Former Kansas City Fed President Thomas Hoenig explained challenges in trying to tackle inflation in both the short and long term.
Former Kansas City Federal Reserve President Thomas Hoenig warned inflation is "more than transitory" as Americans grapple with sky high grocery and energy costs ahead of Thanksgiving. Hoenig appeared on "Mornings with Maria" on Tuesday to discuss how the Federal Reserve faces challenges in tackling short-term and long-term high consumer prices.
THANKSGIVING DINNER COST JUMPS WITH INFLATION ON THE MENU
THOMAS HOENIG: I think the Fed has to begin to recognize the fact that this is more than transitory, there are transitory elements, of course, in terms of the logistics. But there's much more than that in terms of a long history of monetary policy that's been very accommodative. Long history of asset prices, not just bubbles, but asset prices generally rising. That's inflation in one sense that the Fed has to begin to look at that. And then I think where the Fed is really going to be challenged is, with the amount of new spending that has occurred since the COVID, nearly six trillion, if I have the numbers right, for COVID relief, and on top of that, now we have the infrastructure law and we have the Build Back Better bill that is under consideration. These will be major spending issues, and despite what they would have you believe, these probably will be much higher than than the estimates, especially this Build Back Better. Depending on how they renew some of these programs, it could be twice as much as what's being reported… They haven't really raised taxes and [it's] probably a good thing, but that means that the financing of that will become even more dependent on the Fed's willingness to buy securities. So the Fed is at a really difficult position if it tries to attack inflation. You have all this… debt being issued, they will be expected to buy that to keep interest rates low. That will only make the long term inflationary picture more difficult.
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Inflation ‘more than transitory’ ahead of expensive Thanksgiving: Hoenig
Former Kansas City Fed President Thomas Hoenig explained the central bank is in a ‘difficult position’ in terms of trying to tackle rampant inflation.
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