Testifying before the U.S.Senate Banking Committee, the Chairman of the Federal Reserve Jerome Powell stated that price increases had spread more broadly and the risk of higher inflation had heightened. He also noted that the factors pushing inflation upward would linger into next year. "It is time to retire the word "transitory" and explain inflation more clearly," Powell added.
According to the Fed's Chair, though the threat of higher inflation has grown and the risk of more persistent inflation has risen, his baseline expectation is that inflation will move back down over the course of 2022.
He also said that the Fed would use its tools to make sure the higher inflation didn't become entrenched.
Given the fact that the U.S. economy is very strong and inflationary pressures high, Powell also suggested, it might be appropriate to consider wrapping up the taper a few months sooner.