The US Federal Reserve Chair Jerome Powell said Wednesday that inflation has increased notably in recent months but it is expected to be temporary.
'Inflation has come above expectations in the last few months,' Powell said in a video news conference after the Fed kept its benchmark interest rate unchanged at the end of a two-day meeting and released new macroeconomic projections.
'Over time, the very specific things that drive up inflation will be temporary,' he said.
The central bank revised up its expectation on personal consumption expenditures (PCE) inflation to 3.4%, up from a 2.4% estimate made in March, according to its latest projections.
PCE inflation is anticipated to come in at 2.1% next year, and 2.2% in 2023.
'The 12-month increase in PCE prices was 3.6% in April, and will likely remain elevated in coming months before moderating,' Powell said, as he cited increasing oil and energy prices.
'Household spending is rising at a rapid pace,' he said.
The Fed's projections signaled it will raise interest rates in 2023 but the bank has been stressing in recent months it would not make a rate hike until full employment is achieved in the US.
'Indicators of economic activity and employment have continued to strengthen,' said Powell.
'Conditions in the labor market have continued to improve, although the pace of improvement has been uneven. Employment in economy as a whole remains well below pre-pandemic levels,' he said.
By Ovunc Kutlu