Federal Reserve Chairman Jerome Powell estimated this Tuesday (11) that high inflation could last until the middle of this year and signaled that the institution is ready to take action if the increase of prices not cool.
If the inflationary impulse continues beyond mid-2022, “we will react accordingly,” Powell assured during a Senate hearing, implying that the Fed would not hesitate to raise interest rates more aggressively.
“The return to normality will take time”, warned the holder of the monetary entity, at a time when rates are close to zero.
“To ensure sustainable growth [da economia], we must have price stability,” Powell assured lawmakers. The economist attended a hearing before a congressional committee that is evaluating his nomination to head the central bank for a second term.
Consumer prices in the United States rose in November, reaching a rate unprecedented in nearly 40 years of 6.8% in 12 months.
That figure is a far cry from the 2% target that the Fed considers healthy for the economy. December data will be published this Wednesday (12).
Powell attributed most of the rise in inflation to a “mismatch” between supply and demand caused by supply chain disruptions.
He also stressed that restoring price stability is a priority for the Fed.
Furthermore, Powell opined that the end of exceptional monetary support to the US economy would not have a negative impact on the labor market, another priority parameter for the central bank.
“It’s time to begin the transition from a pandemic emergency to a more normal level,” Powell said. “This really shouldn’t have a negative effect on the job market,” he added.
“The job market is recovering incredibly fast” from the crisis it was plunged into by the Covid-19 pandemic in 2020, he guaranteed.
In December, the unemployment rate in the United States dropped to 3.9%, returning to pre-pandemic numbers (3.5%), commented Powell, who, however, acknowledged that the return to work of some people remains difficult even with the large availability of vacancies.
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