Fed Chairman Powell to Warn Congress Inflationary Pressures May Last Longer Than Expected

Federal Reserve Chairman Jerome Powell, in remarks to be delivered Tuesday, warned Washington lawmakers that the causes of the recent rise in inflation could last longer than expected.

In a speech to the Senate Banking Committee, the central bank chairman said economic growth had “continued to strengthen” but had faced upward pressure on prices caused by supply chain bottlenecks and other factors.

“Inflation is high and likely will stay that way in the coming months before it moderates,” Powell said. “As the economy continues to reopen and spending rebounds, we are seeing upward pressure on prices, particularly due to supply bottlenecks in some sectors. These effects have been larger and longer lasting than expected, but they will subside, and as they do, inflation should fall back towards our longer-term target of 2%. “

The remarks are part of Powell’s mandatory testimony to Congress regarding the Fed’s economic response to the Covid-19 pandemic. He will speak to the House financial services committee on Wednesday.

Following its meeting last week, the Fed indicated that it would soon start withdrawing some of the stimulus it provided during the crisis. However, officials stressed that reducing monthly asset purchases does not equate to an impending hike in interest rates.

“At the Fed, we will do everything we can to support the economy for as long as it takes to complete the recovery,” Powell said.