By Dan McCaleb (The Center Square)
Federal Reserve Chairman Jerome Powell told a U.S. Senate Banking Committee on Tuesday that rising inflation poses a “significant threat” to U.S. jobs and economic recovery.
He added that the Fed would raise prices even more than originally planned if there was a need to reduce inflation.
“If we have to raise interest rates over a long period of time, we will,” Powell said. “Rising inflation is a major threat to employment.”
Americans have been paying more for groceries, gasoline and other consumer goods over the past few months as production, distribution and other costs have gone up.
The Producer Price Index Price Index released in December showed the final value – the price index for goods and services for manufacturers – rose 0.8% in November alone with a 9.6% spike last year.
This is the largest increase since the federal government began keeping those figures in 2010.
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At the same time, the Consumer Price Index, a major indicator of inflation, has risen sharply in nearly 40 years.
The Bureau of Labor Statistics of Labor Statistics released a report in December showing a rise in wages by 6.8% over the past 12 months.
Powell said Tuesday that rising consumer demand combined with the problem of wholesale commerce contributes to rising inflation.
“We can touch the important part, we can’t touch the supply side. But this is a combination of the two,” Powell told committee members.
President Joe Biden in November appointed Powell to run for a second term in charge of the central bank. The Senate should reassure him again.
Syndicated with permission from The Center Square.