Economics
Powell Bets Your Inflation Beliefs Will Help Him Keep the Economy From Overheating
- Fed chair counting on inflation expectations staying subdued
- Academic experts warn prices may rise faster than Fed wants
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Federal Reserve Chairman Jerome Powell is pinning his hopes of stopping the U.S. economy from overheating on a variable that a former colleague called “the most significant unobservable of all:” inflation expectations.
In recent public appearances, Powell has argued that the Fed can countenance a fall in joblessness to an almost 50-year low without triggering an inflationary surge in large part because Americans believe the central bank will keep prices under wraps. “The key is the anchored expectations,” he said last week.