- Inflation could rise faster than “some might expect” as the economy recovers from the pandemic, Kansas City Fed President Esther George said.
- The central bank official said current inflation measures are being held down by virus-sensitive sectors that could rebound quickly once vaccines take hold.
Esther George, President & CEO of Kansas City Reserve Bank during the annual Jackson Hole symposium in Wyoming on August 23, 2019.Gerard Miller | CNBC
Long-dormant inflation could rebound more quickly than anticipated as the economy shakes off the effects of the coronavirus pandemic, Kansas City Federal Reserve President Esther George said Tuesday.
Current measures show that inflation remains subdued, as it has been for most of time since the financial crisis of 2008.
However, George noted that the Fed's preferred inflation gauge is weighed down by some of the sectors hardest hit during the Covid-19 crisis. That means it may not accurately represent the real state of inflation, which could rise quickly once the virus is under control and some industries, particularly those in the services and hospitality area, recover.
"In contrast to these sectors, price inflation for many other categories of consumption (particularly
goods) has moved up, sometimes quite sharply," George said in prepared remarks. "Such a scenario does not suggest higher inflation is a near-term threat, but rather that inflation could approach the Committee's average inflation objective more quickly than some might expect."