Fed set to look beyond possible post-pandemic inflation shock

“As people return to their normal lives... there could be quite exuberant spending and we could see upward pressure on prices, ” Fed chair Jerome Powell said.

WASHINGTON: Between the closed theatres and restaurants, the prices slashed by airlines and half-empty hotels, and the government benefits paid or in the pipeline, Americans may have as much as US$2 trillion in extra cash socked away by this spring.

For the Federal Reserve, that is both blessing and curse: fuel for the economic recovery once coronavirus vaccines take hold and people can travel and shop freely, but also the possible spark for a surge in prices that policymakers already are bracing to explain.