Prepared testimony from Powell was released Monday in which he acknowledged the challenges facing the US economy, ahead of Tuesday’s congressional hearing on Jerome Powell’s nomination for a fourth term for head of the Federal Reserve.
“We know that high inflation is a toll precise, especially for those able to meet the high costs of essentials like food, housing and transportation,” Powell said in testimony according to The Associated Press.
Members of the Senate Banking Committee will question Powell in a hearing Tuesday, in which he could face tough questions about whether the Fed is prepared to meet the needs of the economy in the coming months and slow down to record rates. will take necessary steps to do so. Inflation for the last several months
After potentially tough questions, it is still expected that Powell will be confirmed with relative bipartisan support.
In prepared statements, Powell also said that the current US job market is strong and the economy is “expanding at its fastest pace in many years.”
However, he acknowledged that the long-term economy may look different than the US is accustomed to once the pandemic subsides.
“We may be starting to see that the post-pandemic economy is likely to be different in some respects,” Powell said. “These differences need to be taken into account in the pursuit of our goals.”
President Joe Biden announced Powell reappointment in late November,
inflation is so high Highest level in four decades, and on Wednesday the government is expected to report that consumer prices have risen 7.1 percent over the past 12 months, up from November’s 6.8 percent annual growth.
Economists and former Fed officials are expressing concern that The Fed is behind the curve on inflation, The last Friday jobs report, which showed a healthy 3.9 percent drop in the unemployment rate and unexpected wage growth, has fueled those concerns.
While lower unemployment and higher wages benefit workers, those trends could potentially fuel rising prices.
At its last meeting in December, Powell said that the central bank is Rapidly intensifying its efforts to consolidate credit with the goal of containing inflation. The Fed will stop buying billions of dollars worth of bonds in March, ahead of its previously announced target of doing so in June. The purpose of those bond purchases is to encourage more borrowing and spending by lowering long-term rates.
Fed officials now expect to hike short-term interest rates three times this year, a sharp change from September, when they were divided on doing so even once. Economists are increasingly expecting that they will raise rates at least four times in 2022.
Powell has previously said the Fed’s initial goal was to get the economy and job market back to pre-pandemic levels, when the unemployment rate fell to a 50-year low of 3.5 percent and a proportion of Americans were working either. Was or was looking for work more than now.
But recently, Powell has acknowledged that many people working or looking for jobs in the pandemic are unlikely to return anytime soon. Millions of older Americans retired earlier than they were likely to be without COVID, and many are leaving jobs to avoid becoming infected.
This has left businesses chasing fewer workers to fill more than 10 million open jobs, and forced them to rapidly raise hourly wages. Rising salaries can lead to more expenses, possibly driving up prices.
The Associated Press contributed to this report.