On Tuesday’s broadcast of CNBC’s “Squawk Box,” White House Council of Economic Advisers Chair Cecilia Rouse said that the question of whether inflation is transitory “was, and is that it was related to the pandemic, as opposed to a kind of inflation in which we have anchored expectations and we have really entrenched inflation.” And that “the inflation we’re going through right now is related to the pandemic” and she “still” thinks “as supply chains unsnarl, as we get back to our regular economic activity, that we will see inflation come down.”
Rouse said, “I think fundamentally, the inflation we’re going through right now is related to the pandemic and the fact that we shut down our economy, which — and we did that, and globally, that happened as well, to varying degrees. And that is not easy to turn back on a world economy. The Federal Reserve, the federal government did what they needed to do to help people get through that pandemic. And it’s hard with — looking at hindsight, one could — that’s the Monday morning quarterbacking. But, at the time, we knew we needed to support our economy.”
She added, “In my mind, the question of transitory was, and is that it was related to the pandemic, as opposed to a kind of inflation in which we have anchored expectations and we have really entrenched inflation. I still believe that as supply chains unsnarl, as we get back to our regular economic activity, that we will see inflation come down. In fact, if you look at core, it has moderated. President Putin’s invasion of Ukraine is the latest game-changer here, that is really generating the increases in energy markets. And we know that energy seeps into many other goods within the core. So, we have multiple challenges which are causing challenges in terms of inflation right now.”
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