The Federal Reserve is ready to take action to ensure that inflation remains unstable, chairman Jay Powell told U.S. lawmakers at his confirmation trial Tuesday.
In evidence to be presented to the Senate banking committee, Powell – who was elected and President Joe Biden in November to take over the second term of leading US central bank – will acknowledge the rapid growth of the economy, the tightness of the labor market and the financial implications of rising inflation.
“The economy has been very strong despite the growing epidemic, which is leading to economic instability and the need for inequality and constraints, hence rising inflation,” he said in a statement.
“We know that inflation is creating tensions. . . “We will use our resources to support the economy and a strong labor market and to prevent inflation from stabilizing,” he added.
Powell is expected to testify ahead of a recent inflation report, which on Wednesday is expected to show consumer prices rising on a 7 per cent annual clip, the fastest for 40 years.
Powell stressed the need to change the Fed’s approach and said the monetary policy should have a “broad-based and future-oriented mindset, linked to a constantly growing economy”.
When Mr Biden announced Powell’s election in November, he made it clear that having a rise in inflation was crucial to his administration. He also said he had seen Powell and Lael Brainard, a central bank governor who had taken the post of deputy chairman, who were instrumental in helping the US economy recover.
“I believe Jay is the right person to see us and finish the job and deal with those threats [that] rising prices. . . they force [on] our families and our economy, “Biden said at the time.
In the weeks following the election verdict, the Fed began abruptly plastic pivot, ensuring that inflation is “cross-cutting” and instead accepting a more comprehensive approach to ensuring that consumer prices in the US are not stable.
Not only did the Fed speed up the process of rolling out its promotional program, but preparation financial markets are expected to raise interest rates this year and reduce the size of its major page sometime in 2022.
Economists now wait The Fed is about to start “raising” in March and starting to reduce its security spending soon after – a list that many officials have publicly supported.
Goldman Sachs predicts that prices will rise in June, September and December following the March move. It expects the Fed to stop repaying the proceeds from growth in July.
Minutes of the December policy meeting also signed over time, with a history showing policymakers see interest rates rising “faster or faster” than the initial estimate of what it is possible to achieve financial momentum.
New employment on Friday, which highlighted the high unemployment rate down less than 4 percent despite a sharp decline in the number of jobs he finds in the month of December, also encouraged inflation in March.
Wage growth has also risen sharply, with many Americans resigning. Economists to say the economy is on the verge of, if not already, a lot of work, a second goal set by the Fed to determine the right time to move its major policy from zero.
The first target, for inflation to be about 2 percent over time, has become “more than it could have achieved”, Fed officials said.
Powell had previously justified hawkish shifts in the Fed even though jobs were still less than 3.6m higher than before the epidemic, arguing that fixed prices were essential for the long-term recovery of the economy.
In electing Republican Powell, who was first elected to office in 2017 by former President Donald Trump, Biden refused to be challenged by his party’s progressive wing on a multi-party system – which he said had changed the world. financial law directs the major banking institutions in the country. They also objected to Powell’s view of climate change issues and instead called for a leader who could take action in light of the economic risks.
Powell also has to face questions about commercial fraud that started under his watch and were ruled last week when the new revelations of Richard Clarida, the vice-chairman, revealed that he was more busy in the financial markets than he had previously revealed.
Clarida, whose four-year term was due to end at the end of the month, he announced On Monday he resigns this week.
Fed in October he announced laws that significantly reduced workers ’revenues, but recent trade, which took place on the minds of the most affected in the early days of the epidemic, also undermined the loyalty of the central bank.
Clarida is due to be replaced by Brainard, who will meet with the Senate banking committee on Thursday to hear his confirmation.