Strong demand, particularly from the U.S. consumer, may fuel higher inflation in the short term, but there is little risk of runaway price growth, according to the head of Canada’s $403 billion national pension fund.

“It’s going to be really interesting over the next few months. We have a really high savings rate in the U.S., high savings rate in Canada, and really a lot of pent-up demand,” John Graham, chief executive officer of Canada Pension Plan Investment Board, said in an interview on Bloomberg Television. “That could very much in the near term push up inflation but people are looking through that.”

The Federal Reserve has plenty of tools to manage inflation, Graham said. While it’s a tail risk for any institutional investor, “longer term, we really don’t see a real risk of runaway inflation. We probably see a risk of inflation a little bit higher than it’s been historically,” he said.

That fits with the message of Fed Chair Jerome Powell, who said in testimony to Congress that while inflation has been been higher than expected in recent months, it will ease and won’t cause long-term harm.

Graham took the reins of the pension manager in February when his predecessor, Mark Machin, resigned after flying to United Arab Emirates to receive a Covid-19 vaccine, in defiance of government guidelines to avoid international travel. CPPIB had C$497.2 billion ($403 billion) in assets under management as of March 31.

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