Despite Criticisms, Fed Powell Sees No Concern Over US Inflation Rates
As the US Economy strengthens and supply constraints increase prices in some sectors, the economy may see some short-term inflation. However, Federal Reserve Fed Chair Jerome Powell, assured that the Federal Reserve is devoted to maintaining overshoot within its limits. Powell also said that the Fed is not seeking inflation that exceeds 2% nor do they wish for a 2% inflation for a long period of time. He also emphasized that they are fully dedicated to both legs of their dual mandates – maximum employment and stable prices.
Speaking on low inflation, Powell said that it constrains the Federal Reserve’s ability to offset economic shocks with easy policy. After a decade of inflation rates being too low, the aim is now for a moderate rate of above 2% in inflation. As usual, Powell reassured that the Fed has the tools needed to address issues such as increased inflation, if it does get to that stage.
Powell is facing some criticism from Senator Scott, who is not be on the Senate Banking Committee that directly oversees the Fed, however, he still sees some issues with Powell’s views. He has issued a warning that the Fed’s low interest rates and bond-buying program will cause prices to rise, hurting low income families and businesses. In response to Powell’s comments, Senator Scott said that inflation is still rising and that Chair Powell continues ignoring this problem. He continued on to say that Powell needs to lay out a clear plan that addresses the rise of inflation and protects American families.