Four of the world’s leading central bankers have warned supply bottlenecks are likely to last longer than expected and said they are watching for as-yet unrealised signs of them spawning a self-fulfilling cycle of higher expected inflation and wage increases.
Jay Powell, chair of the US Federal Reserve, said it was “frustrating” that supply-chain bottlenecks were holding back the recovery of the world’s largest economy and have helped to fuel more elevated price pressures as they have intensified.
“The combination of strong demand for goods and the bottlenecks has meant that inflation is running well above target,” Powell said on a panel with European Central Bank president Christine Lagarde, Bank of England governor Andrew Bailey and Bank of Japan governor Haruhiko Kuroda on Wednesday. “We expect that it will continue to do so in the coming months before moderating as bottlenecks ease.”