Federal Reserve Chair to Testify Earlier than Congress

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When Jerome H. Powell, chairman of the Federal Reserve, appears before the Senate Banking Committee Thursday, he will testify at a politically and economically tense moment given the recent surge in inflation.

The consumer price index rose 5.4 percent year-over-year in June, the biggest increase since 2008 and a bigger increase than economists had expected. Price pressures appear to be lasting longer than White House or Fed policy makers expected.

In a testimony Wednesday before the House of Representatives Financial Services Committee, Mr Powell attributed rapid gains to factors related to the post-pandemic economy reopening and, in response to being questioned, hinted that Fed officials were somewhat calming inflation expected six months.

He acknowledged that “incoming inflation data has been higher than expected and hoped for,” but said that gains come from a “small group” of goods and services directly linked to the reopening.

For now, he said he was satisfied with the central bank’s relatively patient policy stance despite the hotter-than-expected price data. He said the job market was improving but “there is still a long way to go”.

He also said that the Fed’s goal of “making significant further progress” towards its economic goals before taking the first steps towards more normal political attitudes is “still a long way off.”