A persistent inflation problem is not building in the economy and the Federal Reserve will take all steps necessary to keep any price pressures contained, a top White House economic adviser said on Friday.
"Underlying inflationary trends — while they have ticked up in the past few months, I don't think it's a sign of a persistent inflation problem," Gregory Mankiw, the chairman of the Council of Economic Advisers Chairman, told reporters, citing low unit labor costs.
Mankiw noted that inflation is ultimately a monetary phenomenon and said the Federal Reserve has established a lot of credibility with financial markets over past years.
"(Fed officials) understand what needs to be done and I am confident they will do the right thing, and markets understand they will do the right thing," Mankiw said after a speech to the CNBC Financial Summit.