For a second day, Federal Reserve Chairman Jerome Powell
defended the central bank’s stance to keep providing support to the US 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 per cent, 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 per cent 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.
“I am legitimately undecided on whether the benefits outweigh the costs or vice versa,” Powell said during a hearing before the Senate Banking Committee. If the Fed were to issue its own digital currency, he said, “we would want very broad support in society and in Congress.”
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.