Fed officials tamp down overheating worries as nervous investors look on.

on May5
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Inflation jitters are popping up in earnings call chatter, spooking investors and dominating business television talk shows. One place they aren’t taking over, it would appear, is the Federal Reserve.

America’s central bank is tasked with fostering maximum employment and stable inflation — making it the first line of defense against rising prices. Fed officials have been clear for months that they expect prices to pop this spring and summer as the economy reopens but that they think the jump will prove temporary. By and large, they are sticking to that script.

During a volley of speeches and appearances on Wednesday, central bank policymakers made it clear that they do not think incipient price pressures are going to prove painful or long-lasting. Some suggested they would even welcome what a hotter economy might have to offer.

“You talk about the economy overheating, you kind of go: ‘Gosh, I kind of like producing as much as we can,’” Charles Evans, president of the Federal Reserve Bank of Chicago, said during a call with reporters. “Why would you like unemployment to be higher when it can be lower? It depends on what the added cost is.”

The Fed aims for inflation at 2 percent on average over time, so it is currently angling for a period of slightly higher price gains to offset years and years of very weak gains. Price pressures are picking up a bit as they lap very slow readings from the worst pandemic shutdown last year, and economists think supply bottlenecks could keep them elevated as producers try to ramp up amid reopening.

Officials have been clear they do not expect that situation to be long-lived and do not expect it to force them to rapidly dial back the policies they have in place to bolster the economy — which include buying $120 billion of government-backed bonds per month and keeping interest rates at rock-bottom.

“My view is that this acceleration in the rate of price increases is likely to prove temporary,” Eric Rosengren, the president of the Federal Reserve Bank of Boston, said in a speech Wednesday. “Toilet paper and Clorox were in short supply at the outset of the pandemic, but manufacturers eventually increased supply, and those items are no longer scarce.”

Still, Mr. Rosengren did counsel vigilance, saying the Fed should be paying attention to make sure the economy has not changed in ways that will make wages and prices more responsive to a tightening labor market.

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