Fed Chairman Jerome Powell is likely to be on the grill about inflation in the Senate ratification session.
Federal Reserve Chairman Jerome Powell will face inflation on Tuesday in a Senate ratification hearing for a second term as U.S. chief banker.
In a statement released before the hearing, Powell acknowledged how rising inflation is squeezing U.S. households, especially low incomes that are eroding a larger share of revenues as a result of rising price pressures.
“We know that high inflation requires a toll, especially for those who are unable to meet key costs such as food, housing and transportation,” he said.
President Joe Biden in November knocked Powell for a second four-year term at the head of the Fed. In his first term, Powell led the economy through the nation’s fastest and deepest economic plunge in the early months of the 2020 pandemic, and has since led its recovery.
For most of the recovery, the Fed has kept borrowing costs at an all-time low, with price pressures seen as “transient” as millions of Americans who lost their jobs preferred to return to work in the initial pandemic lockout round.
But in December, nearly 40-year-old inflation was hitting its hottest rate and the job market was filled with an almost record number of job offers, Powell he withdrew the word “transient.” In testimony before Congress. That month, at the end of the Fed’s last meeting to implement its 2021 policy, the central bank took a hawkish change to keep inflation in check, stating that there could be at least three interest rate hikes to cool prices this year.
Since then, minutes of the Fed’s policy implementation meeting released in December last week raised the specter of a rate hike as soon as in March.
And some economists are calling for even more aggressive action by the Fed. In a note to customers on Sunday, economists at Goldman Sachs, led by Jan Hatzius, said they now see a four-year rise in interest rates.
“We continue to see increases in March, June and September, and now we have added an increase in December to 2022 for a total of four,” they wrote.