Federal Reserve's Kaplan says inflation readings could remain elevated at year end

[WASHINGTON] The Federal Reserve will monitor inflation closely as the economy works through imbalances between supply and demand caused by the pandemic to ensure that consumers' inflation expectations remain anchored near the central bank's 2 per cent target, Dallas Fed Bank President Robert Kaplan said on Monday.

Inflation readings should decline in the fall but may be elevated by year-end if some of the disruptions caused by the pandemic persist, Mr Kaplan said during a virtual town hall conversation organized by the bank.

The Fed official said he expects US gross domestic product could grow by 6.4 per cent and the unemployment rate to drift to 4 per cent by the end of the year.

REUTERS