What 'transitory inflation' really means
The US Federal Reserve may have taken a while to catch on, but the data hints that upward price pressures are becoming more structural
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THE chairman of the US Federal Reserve must be regretting ever having used the word to describe inflation. Last year, the Fed said it would allow inflation higher than the customary annual 2 per cent to create more jobs. Now that we are running at 3 times the Fed's normal inflation target, Jerome Powell probably regrets saying that too.
But what does 'transitory inflation' really mean?
The majority of investment managers agree with the Fed, but ask 5 of them to state their definition of 'transitory', and you will get 5 different answers. And while many are sticking to their original assessment, some are starting to change their outlook after October's surprise inflation figures with US consumer prices rising 6 per cent year on year.
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