00:00 Speaker A
Federal Powell has said that his basic scenario is that any inflation of rates can be transient. But we have heard of some of your colleagues at the Boston Fed and the St. Louis Fed, who are concerned about possible long -term effects for inflation. UH, St. Louis Fed President Alberto Musallam brought the idea of domestic producers raising prices in consultation with importers. We also know that we will see rates for intervening goods that can wrinkle through the supply chain. So what about the potential for long -term effects when it comes to inflation and rates?
00:50 Speaker B
Well, you have marked a number of channels where you could get more long -term effects. So the example you gave about uh -the inputs. UH that, you know, increases the costs for American producers. It takes some time for people to enter consumer prices and appear in inflation. So there is definitely a channel that teaches us the history of the past, can take a few years to be completely UH, you know, seen in the data. Uh but there are others, you know, questions that are there or or or how does it transfer to other UH goods and services in the economy? So I would say it is still early days and to be able to come to a concrete, you know, concrete conclusion about this. I think someone is, yes, we will see that rates influence prices. And then we just have to keep looking at how that cascade in prices, you know, downstream to other goods in the economy? What do we see the effects on some other goods that UH is produced in the US? And and I really have an open mind about how long they last in terms of their effects on inflation and economy.
02:28 Speaker A
You said it could take a few years before filtering this. So do you think this will move slowly or did some people say that it can be moving quickly?
02:41 AM Speaker B
Well, I think it will be both. Uh so I think the answer to many of your questions is really yes, because I think all these things will happen. One is that, on consumer goods, I think history sees a pretty strong pass through it that happens fairly quickly. Uh but still, you know, you know, depending on the market, you know, companies can take their time to change their prices. So that can take a matter of months or so. It is really in these intermediate inputs or perhaps indirect effects that I think the effects may not be felt for a few years. So I think we should view all these channels. So the way I see it is that we really have to look at the detailed data and understand what direct effects have on rates on prices, but also some of the indirect effects that can filter through the wider economy.
