Corporate America is “frustrated” with the Fed over a misunderstanding of inflation, Gary Cohn told CNN.

Kohn, who is in frequent contact with company executives, told CNN that businesses have been facing wage inflation and rising costs for more than a year.

“I think the business community is disappointed that it took the Fed so long to come to terms with the reality of what the business community saw,” he said.

“They were lagging behind,” said Cohn, who served as director of the National Economic Council from 2017 to 2018.

Fed officials initially dismissed last year’s inflation as “temporary” before eventually admitting there was a more permanent and widespread problem.

“The business community has been seeing real inflation for a long time,” said Cohn, who was a senior executive at Goldman Sachs before joining the Trump White House. “And I don’t think the business community ever thought it was temporary. I think they thought it was real. And they didn’t think it would go away anytime soon.”

Now the Fed is playing catch up. Fed officials last week announced the biggest rate hike since 1994, heightening the threat of higher borrowing costs for everything from mortgages and auto loans to credit cards.

Asked if Chairman Jerome Powell is still the right man to lead the Fed, Cohn was almost unsupportive.

“Look, he’s the chairman of the Fed,” said Cohn, who was himself a running mate in 2017 before Trump picked Powell. “He is doing his job. You may argue that you do not agree with what he did. I don’t agree with what he did. I think they were late with the game and raised the stakes. But he is the chairman.

Cohn noted that Powell is hardly the first Fed chairman to be criticized either for keeping rates too low for too long or for failing to cut them fast enough.

Of course, inflation was exacerbated by Russia’s invasion of Ukraine. The war led to higher prices for food, energy and other materials.

“We clearly had inflationary pressures last year before the war, but the war in Ukraine has clearly accelerated it,” Cohn said.

The Fed declined to comment on Tuesday. But on Festival of the Future of Everything hosted by the Wall Street Journal last MayAccording to Powell, the Fed makes decisions in real time.

“If you replay last summer, we had a real spike in inflation that started in March, April, May, June of last year, and then inflation went down month after month after month … until the end of the summer,” he said. said. “So we were worried because we were seeing inflation spread more widely and because we weren’t seeing improvement in supply chain problems… We had real concerns.”

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