WASHINGTON — Federal Reserve officials at their April meeting reaffirmed the view that the central bank’s ultra-low interest rate remained the best policy approach, but some officials cautioned that some factors pushing inflation higher may not be resolved quickly.
In minutes of their discussions released Wednesday, a number of participants in the discussions expressed the view that supply chain bottlenecks and input shortages that were pushing prices higher may not be resolved quickly and could end up putting “upward pressure on prices beyond this year.”
Some officials said that in some industries, the supply chain disruptions appeared to be “more persistent than originally anticipated.”
Still, even with the concerns expressed about price increases, Fed officials said that longer-term expectations about inflation remained well anchored at levels broadly consistent with achieving the goal of annual price increases hitting the Fed’s 2% target after a short period when they rose above that level.
The Fed at the April meeting kept its benchmark rate at a record low of 0% to 0.25%, where it had been since March 2020 when the Fed slashed rates after the pandemic hit and millions of people were losing their jobs.
The Fed discussions took place on April 27-28 and the minutes were released with the customary three-week delay.
The Fed will next meet on June 15-16 against a back-drop of rising concerns in financial markets about recent price jumps that signal inflation, after years of being dormant, may have started to accelerate markedly.
The government reported last week that consumer prices jumped in April by 0.8%, the largest monthly gain in more than a decade with prices rising across a wide range of products from food to used cars.
Fed Chairman Jerome Powell and other Fed officials have continued to insist that the inflation seen now will prove to be transitory, a product of a re-opening economy and supply bottlenecks. They believe that in a few months, price gains will slow to a more sustainable pace.
However, some analysts are concerned that the Fed’s insistence on keeping interest rates at such low levels could lead to an inflationary surge that will be hard to bring under control. But Powell and other officials contend that if inflation does accelerate, they have the tools to bring it back under control.
