Fed Chair Jerome Powell draws criticism for admitting ‘how little we understand about inflation’
Federal Reserve Chairman Jerome Powell erroneously stated in 2021 that inflation would be 'transitory'
{{#rendered}} {{/rendered}}During an interview on Wednesday, U.S. Federal Reserve Chairman Jerome Powell said that the ongoing inflation crisis highlights "how little we understand about inflation."
The comments were made during a European Central Bank forum that was moderated by Bloomberg Editor at Large Francine Lacqua.
"I think we now understand better how little we understand about inflation," Powell said.
{{#rendered}} {{/rendered}}"That sounds very reassuring," Lacqua responded.
"No, honestly, this was unpredictable," Powell replied.
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{{#rendered}} {{/rendered}}U.S. President Joe Biden announces the nomination of Federal Reserve Chair Jerome Powell for a second four-year term, in the Eisenhower Executive Office Building’s South Court Auditorium at the White House in Washington, U.S., November 22, 2021. REUTERS/Kevin Lamarque
During the forum, Powell stated, "The U.S. economy is actually in pretty good shape."
Powell said that growth is exceeding what the central bank had predicted and that it is raising interest rates to "slow growth down so that supply will have a chance to catch up."
Powell received criticism for his remark about not understanding inflation, as many in the public have expressed concerns about inflation for over a year.
{{#rendered}} {{/rendered}}Wall Street Silver, a popular investing forum on Youtube and Reddit, tweeted, "Only the ‘experts’ and the media didn't see this coming. Just about everyone else did."
Wall Street Silver also highlighted how in 2008, then Fed Chairman Ben Bernanke predicted that there would not be a recession just before the Great Recession. The account tweeted, "‘The Federal Reserve is not currently forecasting a recession.’ - Ben Bernanke, January 2008"
Douglas A. Boneparth, a member of the CNBC Advisor Council and author, tweeted, "Jerome Powell in 2021 = ‘Inflation is transitory.’ Jerome Powell in 2022 = ‘We now know how little we understand about inflation.’"
{{#rendered}} {{/rendered}}Mark Hamrick, who previously served as president of the National Press Club and is a financial reporter, tweeted, "Central bankers (and just about everyone else) have gotten lessons in humility. Jerome Powell: We understand better how little we understand about inflation."
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WASHINGTON - JANUARY 22: The Federal Reserve building is seen January 22, 2008 in Washington, DC. (Photo by Chip Somodevilla/Getty Images)
Powell made news last week for saying that Russian President Vladimir Putin’s invasion of Ukraine is not the main driver of inflation, in contrast to rhetoric espoused in recent months by the Biden administration.
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Inflation is at a 40 year high, the average price of gas per gallon is above $5 for the first time in American history, and consumer sentiment is at historic lows.
According to data released by the Department of Commerce Wednesday, America’s gross domestic product "shrank by 1.6% on an annualized basis in the three-month period from January through March."