Powell: "Prolonged Inflation Is Surprising"... Dollar Hits Highest in a Year

Supply Chain Crisis, Rising Inflation Pressure
"Inflation is Temporary" Statement Reversed
Dollar Index Hits Highest in a Year
Won-Dollar Exchange Rate Surges

[Image source=AP Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), forecasted that inflation could continue into next year due to the global supply chain bottlenecks caused by COVID-19.

According to foreign media including The Wall Street Journal (WSJ), Powell said on the 29th (local time) at a conference hosted by the European Central Bank (ECB), "Inflation is exceeding the target due to strong demand for goods and bottlenecks," and described the worsening bottlenecks and supply chain issues that are increasing inflationary pressures as "frustrating."

He stated, "We have long predicted that the current surge in inflation would not lead to a new situation of persistently high inflation every year." This remark by Powell reverses his previous statements that inflation would be "transitory." However, Powell added, "It is very difficult to say how large the impact will be and how long it will last, but we expect to recover and overcome it."

Not only Powell but also Christine Lagarde, President of the ECB, Andrew Bailey, Governor of the Bank of England (BOE), and Haruhiko Kuroda, Governor of the Bank of Japan, who participated in the event, all warned that supply chain bottlenecks and the resulting inflation would be prolonged.

Following Jerome Powell's remarks, the dollar strengthened, and the dollar index reached its highest level in a year. On the 30th, in the Seoul foreign exchange market, the won-dollar exchange rate opened at 1,188.0 won, up 6.2 won.

This content was produced with the assistance of AI translation services.