Jerome Powell faced questions from the Senate Banking Committee Tuesday.
Americans shouldn’t worry about high inflation because the Federal Reserve is on the case, Fed Chair Jerome Powell told the Senate Banking Committee Tuesday.
“If we have to raise interest rates more over time, we will. We will use our tools to get inflation back,” Powell said.
Powell faced questioning from both Republicans and Democrats who are taking the central bank to task over high inflation in an election year.
Both sides of the aisle have expressed concern over the Fed’s bond purchases and historically low interest rates as inflation has gripped the U.S.
The Federal Reserve has signaled that it intends to raise rates multiple times this year, with as many as four hikes possible in coming months.
Minutes released last week from the Fed’s policy meeting last month said rampant inflation and a red-hot job market could necessitate rate hikes “sooner or at a faster pace than participants had earlier anticipated.”
Powell was asked about the Fed’s plans to shrink its $8.77 trillion balance sheet and vaguely said that at some point this year it will allow the balance sheet to run off, according to Bloomberg.
The median expectations among respondents to a Federal Reserve Bank of New York survey expect 6% inflation in 2022.
