WASHINGTON: The majority of policymakers at the US central bank believe US price pressures will rise in 2018 despite recent weakness, Federal Reserve Chair Janet Yellen said Sunday.
Sharp divisions among Fed members have persisted since last year over the causes of persistently weak inflation, which has failed to rise in the face of falling unemployment and steady job creation.
But the Fed is widely expected to raise rates in December for a third time this year, in the expectation that inflation will eventually kick in.
“My best guess is these soft readings will not persist and with the ongoing strengthening of labor markets, I expect inflation to move higher next year,” Yellen said.
“Most of my colleagues agree.”
She spoke at an international banking seminar in Washington at which the chiefs of also delivered remarks.
At its most recent policy meeting, the Fed left rates unchanged but forecast one more increase this year and a further three in 2018.
Minutes released last week showed however that a vocal minority of Fed policymakers do not accept one-off explanations — such as sudden drops in mobile phone and prescription drug prices — for weak inflation and are calling for the Fed to hold off raising rates prematurely.