Yellen: Spike In Prices Won’t Prompt Policy Shift

Rising demand and disrupted supplies caused a spike in commodity prices over the past year, and it is unlikely that they will cause consumer inflation or derail the recovery, so it does not warrant any substantial shift in the stance of monetary policy, Federal Reserve Board vice chairwoman Janet Yellen told the Economic Club of New York Monday.

“However, my colleagues and I are paying close attention to the evolution of inflation and inflation expectations, and we are prepared to act as needed to help ensure that inflation, over time, is at levels consistent with our statutory mandate,” Yellen said, according to a prepared text of her speech that was released by the Fed.

“While I continue to anticipate a gradual economic recovery in the context of price stability, I do recognize that further large and persistent increases in commodity prices could pose significant risks to both inflation and real activity that could necessitate a policy response.”

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