“The concept of transitory is really this: it is that, uh, the increases will happen. We’re not saying they will reverse. That’s not what transitory means. It means that the increases in prices will happen, so there will be inflation, but that the process of inflation, uh, will stop so that, so that there won’t be furth- uhn fur-.. When we, when we think of inflation we really think of inflation going up year up year upon year upon year – that’s inflation. When you have inflation for 12 months, or whatever it might be, I’m just taking an example, I’m not making a estimate, then you have a price increase, but you don’t have an inflation process. And so, uh, part of that just is, uh, if it doesn’t affect longer term inflation expectations then it’s very likely not to infect, eh to, to affect the process of inflation going forward. So what what what I mean by transitory is just something that doesn’t leave a permanent mark on the inflation process. Again, we don’t mean, I don’t mean, that, that, that, that, you know, producers are gonna take those price increases back – that’s, that’s not the idea. It’s just that they won’t go on indefinitely.

So, to the extent people are, are, are implementing price increases because raw materials are going up, or labor costs, or something’s going up, um, uh, you know, the question really for inflation really is ‘Does that mean they are going to up the next year by the same amount, so you’re gonna be in a process where inflation, the inflation process, gets going?’ And that happens because people’s expectations about future, uh, inflation mo-, move up. And we don’t think that’s happening, there’s no evidence that it’s happening, all the evidence is that it’s not happening, but, nonetheless, we have to watch this very carefully because this is, you know, uh uh, we have two mandates: maximum employment and price stability: price stability for us means inflation averaging two percent over time, and so, we’ve gotta be very careful about that”. – Jay Powell explaining “transitory” inflation, verbatim from the transcript of the post-FOMC press conference (courtesy of James Anderson, SD Bullion, @jameshenryand)