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Powell Defends Fed Stance on Temporary Inflation, Watching Risks

EconomyJul 15, 2021 11:00AM ET
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© Reuters. Powell Defends Fed Stance on Temporary Inflation, Watching Risks

(Bloomberg) -- For a second day, Federal Reserve Chairman Jerome Powell defended the central bank’s stance to keep providing support to the U.S. economy even as inflation runs at uncomfortable levels.

“This is a shock going through the system associated with the reopening of the economy and it’s driven inflation well above 2%, and of course we’re not comfortable with that,” Powell told the Senate Banking Committee Thursday.

The Fed chair called the price developments “unique” in history and said the central bank is closely watching to see whether its expectation that the high inflation will prove temporary is correct, or whether it threatens to be longer lasting.

“So we’re really trying to understand the base case and also the risks,” he said.

This is Powell’s second round of testimony this week on Capitol Hill. On Wednesday, he was peppered with questions about surging prices from lawmakers serving on the House Financial Services Committee.

Consumer prices soared in June by the most since 2008 and were up 5.4% from the same month last year.

Powell’s remarks before Congress are his last semi-annual testimony before President Joe Biden decides whether to give him another four years at the Fed helm or pick someone else. Powell’s tenure as chair expires in February.

The economy is recovering strongly from last year’s pandemic-driven swoon, with economists forecasting growth clocked in at a double-digit annualized pace in the second quarter.

©2021 Bloomberg L.P.

 

Powell Defends Fed Stance on Temporary Inflation, Watching Risks
 

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Comments (1)
Val Lange
Val Lange Jul 15, 2021 11:56AM ET
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In the fall the third wave is coming, more printing on the way, I doubt they could keep 2%, impossible. Pensioners will cover the bill.
 
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