Fed’s Commitment to Fight Inflation Is Unconditional, Says Powell

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The chairman of the Federal Reserve (Fed, the US central bank), Jerome Powell, assured that the institution’s commitment to fighting inflation is “unconditional”.

During a hearing before the House Financial Services Committee, he repeated his speech yesterday in the Senate and admitted that we “clearly underestimated” inflation in the past.

Powell attributed current US inflation largely to stronger-than-expected demand. According to him, it is undoubtedly possible to contain inflation without causing unemployment, but “there is a risk” that the rate will increase.

In any case, the current job market in the country is currently very heated, at an “unsustainable” level, in the opinion of the authority.

The president of the Central Bank of the United States also said that, given the recent rise in energy prices, the Fed’s task of seeking a “soft landing” in the US economy becomes “more challenging”.

For him, in any case, the country’s economy at the moment is “very strong”.

Powell also assessed that financial markets have been working well, with banks “in a solid position”.

In his assessment, the markets understood the Fed’s balance sheet reduction plan and are well positioned in this context.

The official also said that the Treasuries market can go through this process of reducing the Fed’s balance sheet without problems.


Powell also predicted that, even with the monetary tightening in progress, the growth of the Gross Domestic Product (GDP) of the United States should be “very strong” in the second half of this year. it to the 2% target.

Powell commented that the Fed has no way of influencing oil prices, established internationally, nor the energy supply.

At another point, he noted that recent wage advances seen in the country “are not consistent” with the Fed’s inflation target.

He also commented that controlling prices to contain inflation is an alternative that “does not have a favorable history”.

dollar status

The Federal Reserve chairman further assessed that the dollar’s status “is not threatened” in the current situation.

During the hearing in the House of Representatives committee, he said that this could happen in the long term, if the US public debt issue is not resolved.

Earlier at the event, Powell had commented that he did not see an imminent fiscal risk, but recalled that, in the longer term, the country will need to ensure a sustainable fiscal path.

crypto assets

The president of the US central bank was also asked about crypto assets. According to him, it is not yet known whether the US needs a digital dollar.

Powell stated that a central bank-issued digital currency (CBDC) could be an option, if endorsed further, and considered that if this digital dollar is deemed necessary, it is better that it be issued by official institutions, not by a company that can profit from it.

Source: CNN Brasil

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