Dennis Jansen Discusses Inflation on KBTX

Jun 16, 2021
Summary: As prices increase for consumer goods, worries about inflation continue to rise. In an interview on Monday, June 14, 2021, Dennis Jansen spoke to KBTX news on how inflation is defined, the Federal Reserve’s inflationary goals, and if our economy is headed for another recession.

Jansen explained that inflation is the general rise in the price level, defined by the Consumer Price Index, Personal Consumption Deflator and other indices. “When you see the Consumer Price Index getting higher, and it has been reported higher - its gone up 5% year over year in the last month - then that’s higher [average] prices across a wide variety of goods.”

The Federal Reserve (Fed) influences inflation by managing the U.S. money supply and setting the federal funds interest rate. “The question is, will the growth in prices, will this inflation rate ever return [closer] to the Fed’s target, which the long run target of the Fed is 2%. If it does return to 2% growth in prices, then I guess people would say that this increase was temporary. It takes time for these prices to grow, but then it ends and we might be back to a 2% growth rate in the price level. I would say that I don’t see that happening in the next month or two,” said Jansen.

“I do think that this inflation is higher than the Fed expected, but they did want inflation around 2%, and it’s hard to fine-tune the inflation rate…The Fed seems fairly confident that they do have long-term control, so I guess we will see. In fact, inflation is a sign of a growing or recovering economy, it’s not a sign of a growing recession. I don’t think, in the near-term, we need to worry about a recession. I’m a little less sure that we don’t need to worry about inflation, of course.”

See the full interview on KBTX.com.