Federal Reserve Chairman Jerome Powell on Thursday defended the U.S. central bank’s decision to keep in place the ultra-easy policy measures implemented last year during the COVID-19 pandemic, even as inflation surges to the highest level in 13 years.
Returning to Capitol Hill for a second day of testimony on the economy and monetary policy, Powell – speaking before the Senate Banking Committee – faced scrutiny and skepticism from some Republican lawmakers that the recent burst in consumer prices is fleeting.
“This is a shock going through the system associated with reopening of the economy, and it has driven inflation well above 2%. And of course we’re not comfortable with that,” Powell told lawmakers.
Powell has repeatedly blamed pandemic-driven bottlenecks in the supply chain and pent-up consumer demand for the rapid increase in the price of goods and services. The government reported on Tuesday that inflation rose at the fastest pace since 2008 in June, with consumer prices jumping 0.9% from May and 5.4% over the past year.
The Fed chair called the price spike “unique,” and reiterated the central bank is closely monitoring to see whether the inflation dissipates, or whether it proves to be longer-lasting.
