It will take some time before we see substantial further progress,” Powell told reporters on Wednesday.
This is not the same thing as persistently higher year-over-year inflation that is not consistent with our goal of 2% inflation over time,” he said.
On top of that, Powell reminded markets that the Fed knows its job and is prepared to act if inflation were to move persistently and materially above 2%.
In the meantime, there are two main reasons for temporary inflation pressures in the near term: Base effects, which are transitory.
“We were focused for many years on inflation deviating below 2%, and we used our tools aggressively to bring it back up at 2%.
Gold prices reacted positively to Powell’s comments, recovering earlier losses and rising to daily highs.
And of course, we have open capital accounts, which are essential if you are going to be the reserve currency,” he said.