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Photo: Al Drago / Bloomberg – |
As US prices continue to rise, US Federal Reserve Chairman Jerome Powell has declared war on inflation. “We know that high inflation is having a negative effect,” the Fed chairman said in a pre-release version of his speech scheduled for Tuesday before a Senate committee.
The Federal Reserve is strongly committed to its goal of achieving full employment and price stability. This is what Powell said in his speech.
Powell is due to be heard later on Tuesday over his nomination for a second four-year term as head of the Fed. “We will use our tools to support the economy and a strong labor market and to prevent stagnant accelerating inflation,” the governor said in a speech.
There is speculation in the markets that the Fed may initiate a turnaround in interest rates as early as March and take action against the sharp rise in prices. In November, US inflation rose to 6.8%, the highest level since 1982. Experts polled by Reuters expect data for December, which will be published on Wednesday, to show an acceleration to 7.0%. Inflation is fueled by supply problems caused by the coronavirus crisis, material shortages and soaring energy costs.
“On the eve of the pandemic, the US economy was enjoying its 11th year of expansion, the longest period so far. Unemployment was at a 50-year low, and economic support reached those who needed it most. No financial or economic imbalances threatened continued growth. But that appealing picture changed from today to tomorrow, when the virus began to spread around the world, “Powell said.
He said the initial contraction was the fastest and deepest so far, but “the problem could have been bigger”. “In the Federal Reserve, we used the full range of instruments from [паричната политика]. We have acted quickly to restore vital credit flows to households, communities and businesses and to stabilize the financial system, “Powell said, adding that joint efforts, vaccine supplies and US resilience have contributed to a historically strong recovery.
“Today, the economy is recovering at its fastest pace in many years and the labor market is strong, but as always, the challenges remain,” he said.
According to him, the economy after the pandemic will be different in some respects, and therefore monetary policy must have a more comprehensive and forward-looking vision. “We will continue to be vigilant about new and growing threats,” Powell said.
“The Federal Reserve works for all Americans,” said Powell, who has led the Fed since early February 2018. He said he adheres to the principles of transparency and clear communication and actively seeks cooperation with parliamentarians: “I promise to continue this practice if be confirmed for another term. “
President Joe Biden has nominated Powell for another four-year term. Thus, the Republican must be re-elected to the Senate. As part of this process, he will have to answer questions to the members of the banking committee.
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