New York”•The US economy remains on a positive trajectory even as it contends with higher inflation, according to congressional testimony released Monday by the head of the Federal Reserve.
Fed Chair Jerome Powell, in prepared remarks ahead of a House hearing Tuesday, reiterated that the central bank will continue its supportive stance to ensure that the “sustained improvement” since the depths of COVID-19 pandemic is extended.
The labor market has improved, but progress has been “uneven,” said Powell, in remarks consistent with his response to questions at a news conference last week.
“We at the Fed will do everything we can to support the economy for as long as it takes to complete the recovery,” Powell said in the testimony.
Powell acknowledged that inflation has “increased notably in recent months” due in part to higher oil prices and the hit from supply chain disruptions.
But he restated that higher prices are due to “transitory” factors, adding that “inflation is expected to drop back toward our longer-run goal.”
Powell’s appearance before the House Select Subcommittee on the Coronavirus Crisis comes less than a week after the US central bank moved up its timeframe for lifting interest rates to 2023.
The Fed’s monetary policy committee said it will not begin to withdraw the stimulus measures implemented at the start of the pandemic until progress is made on reducing unemployment and keeping inflation above their two percent goal.
At last week’s news conference, Powell warned that the “recovery is incomplete” and improvement has been “uneven,” with employment in hard-hit sectors well below pre-pandemic levels.