“We have not made substantial further progress toward our labor market objective,” Mr. Clarida said Wednesday, speaking to business economists on a webcast.
The demand surge that seemed to drive the monthly price gain in April — the one pushing travel costs higher, for instance — struck some economists as being exactly the kind of reopening bump that the Fed has so often said it can tolerate.
“It shows the services side of the economy is reawakening,” said Sarah House, a senior economist at Wells Fargo. “This is largely what the Fed expected, it’s just coming faster and with larger force.”
The Fed defines its inflation target using a separate measure, the Personal Consumption Expenditure index. That metric relies partly on data from the C.P.I. and is also expected to move above the central bank’s goal of 2 percent annual inflation, on average, over the coming months.
For much of the past decade, inflation has actually been too low, rather than too high — risking a downward spiral, and robbing central bankers of room to bolster the economy in bad times by cutting interest rates, which include inflation. As a result, the Fed last year redefined its 2 percent inflation target to make it clear that it will aim for periods of slightly faster price gains to make up for months of slow ones.
Fed officials have been clear in recent weeks that as inflation pops, they need to focus on both risks: that it might take off, but also that it might sink back down after a 2021 reopening jump.
“The Fed has a fundamentally different framework. I mean, we cannot apply the playbook of the Fed in the previous recovery to what’s happening now,” said Jean Boivin, head of the BlackRock Investment Institute. “I think each time we get a number that surprises in the upside, we get an extrapolation, too much extrapolation, into a Fed tightening coming sooner.”
Matt Phillips, Jim Tankersley and Ella Koeze contributed reporting.