Months of high inflation was just one of the topics that Federal Reserve Chair Jerome Powell discussed in front of the Senate Banking Committee Tuesday. The hearing was scheduled to consider Powell for four more years as the head of the Fed. President Joe Biden announced he was nominating Powell for a second term last November.
“We know that high inflation exacts a toll, particularly for those less able to meet the higher costs of essentials like food, housing, and transportation. We are strongly committed to achieving our statutory goals of maximum employment and price stability,” Powell said in prepared remarks Tuesday. “We will use our tools to support the economy and a strong labor market and to prevent higher inflation from becoming entrenched.”
His nomination hearing comes as some banks are now predicting the Fed will raise its benchmark rate four times this year to deal with record inflation. Last month, the Fed forecasted only three rate hikes for 2022. Economists and former Fed officials are increasingly raising concerns the Fed is behind the curve of inflation.
Powell did not address rate hikes specifically in his opening statement, only saying the Fed has “updated our monetary policy framework.”
The hearing also comes just ahead of two important Labor Department reports, which will give an updated picture of where inflation is at. The Consumer Price Index for December will be released on Wednesday, and the Producer Price Index for December will be released on Thursday.
Before Powell spoke on high inflation Tuesday, his nomination received “broad bipartisan backing” from committee leaders Sherrod Brown (D-OH) and Pat Toomey (R-PA). Sen. Brown said Powell led “unprecedented actions to stabilize our economy in the face of a global pandemic.”
“Chair Powell, to his credit, recognized the importance of full employment – and what that means for all workers, particularly those at the margins of our economy,” Brown said in his opening statement. “He held firm against attempts to politicize the Fed, and prevented an economic downturn from becoming far worse.”