Federal Reserve Chairman Jay Powell testified before Congress this week and, as usual, stuck to the expected talking points. He was pressed particularly hard on inflation by Republican lawmakers. You may or may not be surprised by what he said, but essentially it is more of the transitory narrative. Opposition to runaway inflation has, after all, probably been amongst the most potent political forces in history. Just ask Louis XVI. Nonetheless, Powell and the governors remain publicly confident that most sources of rising prices are transitory and unique to the economic re-opening and anomalous demand patterns.

The hearing had many potential stumbling blocks but the seasoned Powell by now knows his way around a hearing. One lawmaker pointed out that he mentioned inflation would be temporary six months ago, and that families paying high prices don’t necessarily appreciate the “transitory’ argument as much as the financial media does. It will be interesting to see whether or not this issue resonates as effectively as in the past with the most financially healthy US consumer in recent history.

While the conversation about tapering is certainly in full stride, according to Powell, the act is still far-off. As we mentioned last week, there is growing rumblings on the boar...

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