I wasn't cherry picking; those quotes weren't to show that they were wrong, but rather to back up my claim regarding the sense in which they used "transitory" and "transient" to mean inflation that was brief enough that policy action would not be required. Nor do I have any opinion on US partisan policy arguments, as long as it doesn't involve bailouts for overleveraged institutions.
And no, that definition is too simple. There are several camps here, and several ways to be wrong:
A) Inflation will be transitory, therefore, we don't need to worry about it, and the Fed can keep interest rates low.
B) Inflation will be transitory, because even if it starts getting out of hand, monetary policy will take appropriate action to bring it back to target, no matter how painful.
C) Inflation will not be transitory unless central banks take unprecedented action. I don't know if they will do that or not, but they should.
D) Inflation will not be transitory, because central banks aren't going to tighten monetary policy. It would be too painful. Because they will keep real interest rates negative, inflation will continue.
E) Inflation will not be transitory, regardless of what monetary policy does in response. We're on the path to never-ending Argentinian-style inflation.
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As the quotes (and the bond market) show, (A) was the common view among institutions in 2021, including central banks, and a lot of the pushback against inflation being "transitory" was in opposition to this view. The usage of "transitory" to justify continuing stimulative monetary policy indicates that Jerome Powell was firmly in camp (A) until at least late 2021. This was very concerning to many people who thought that inflation was much stronger than the central bank anticipated, and monetary tightening would be needed, and this is what drove most of the agitated commentary saying "they're wrong about it being transitory!", including mine. The Fed appears to have eventually come around to that view, right or wrong. It is now difficult to disentangle (A), (B), and (C), because between 2021 and now, monetary policy pulled an abrupt U-turn that roughly coincided with the start of disinflation, which all the (B), (C), (D), and (E) camps were pushing for. (D) and (E) are arguably disproven by the data, unless we see another big round of inflation. But since many of the "inflation is not transitory" voices were in camps (B) and (C), those viewpoints are not unsupported by the data so far.
I, for one, was never in camp (E), but I was in camp (D) until the Fed eventually changed my mind.
And no, that definition is too simple. There are several camps here, and several ways to be wrong:
A) Inflation will be transitory, therefore, we don't need to worry about it, and the Fed can keep interest rates low.
B) Inflation will be transitory, because even if it starts getting out of hand, monetary policy will take appropriate action to bring it back to target, no matter how painful.
C) Inflation will not be transitory unless central banks take unprecedented action. I don't know if they will do that or not, but they should.
D) Inflation will not be transitory, because central banks aren't going to tighten monetary policy. It would be too painful. Because they will keep real interest rates negative, inflation will continue.
E) Inflation will not be transitory, regardless of what monetary policy does in response. We're on the path to never-ending Argentinian-style inflation.
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As the quotes (and the bond market) show, (A) was the common view among institutions in 2021, including central banks, and a lot of the pushback against inflation being "transitory" was in opposition to this view. The usage of "transitory" to justify continuing stimulative monetary policy indicates that Jerome Powell was firmly in camp (A) until at least late 2021. This was very concerning to many people who thought that inflation was much stronger than the central bank anticipated, and monetary tightening would be needed, and this is what drove most of the agitated commentary saying "they're wrong about it being transitory!", including mine. The Fed appears to have eventually come around to that view, right or wrong. It is now difficult to disentangle (A), (B), and (C), because between 2021 and now, monetary policy pulled an abrupt U-turn that roughly coincided with the start of disinflation, which all the (B), (C), (D), and (E) camps were pushing for. (D) and (E) are arguably disproven by the data, unless we see another big round of inflation. But since many of the "inflation is not transitory" voices were in camps (B) and (C), those viewpoints are not unsupported by the data so far.
I, for one, was never in camp (E), but I was in camp (D) until the Fed eventually changed my mind.