Inflation Case Supplement_Powell Speech at Jackson Hole 2021

In early 2022, the economy was in a precarious situation. After a pandemic-induced recession that saw the global economy grind to a halt, the U.S. entered a phase of recovery. Unemployment was nearing record-lows and GDP surpassed its pre-covid levels. However, prices had been rising for months and unexpected factors, including a disruption of global supply chains, the threat of new covid variants, and the invasion of Ukraine by Russia, meant a variety of goods were not making it to consumers without major delays, driving prices to even greater heights. In fact, inflation in February climbed to 7.9%, marking the biggest annual increase in four decades. Calls on the Fed to take decisive action to tame inflation intensified, however any decision would be closely scrutinized, and the Fed was wary to repeat past mistakes.