6/1/2021, 4:48 PM (Source: TeleTrader)
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Fed has tools to deal with inflation if it proves durable - Quarles

Federal Reserve Vice Chair of Supervision Randal Quarles tried to ease inflation worries on Tuesday saying that he still believes it will only be transitory but asserted that if inflation proves to be more durable the Fed had tools to deal with it.

Quarles stated that the price pressures are primarily caused by a lag of workers returning and with the country's reopening following the pandemic, but reiterated that those pressures are only temporary. Furthermore, he asserted that risks to the financial system are moderate while adding that their stress tests showed a "very resilient banking system." However, he noted that the Fed's projections could be wrong and that if expectations begin to change the bank would help anchor them.

Quarles also touched on the employment market, saying that he believes the US hasn't reached maximum employment yet. Finally, he also noted that there is potential gain in reducing the Fed balance sheets down the line.

Baha Breaking the News (BBN) / OL