Federal Reserve Chairman Jerome Powell told lawmakers Tuesday that the central bank is “strongly committed” to keeping prices stable, as he seeks confirmation for a second four-year term.
In testimony to the Senate Banking Committee, Mr. Powell acknowledged the impact that record-high inflation has had on average Americans.
“We know that high inflation exacts a toll, particularly for those less able to meet the higher costs of essentials like food, housing, and transportation,” Mr. Powell said. “We are strongly committed to achieving our statutory goals of maximum employment and price stability.”
He also said that the economy’s rapid recovery during the COVID-19 pandemic has contributed to “persistent supply and demand imbalances and bottlenecks, and thus to elevated inflation.”
“We will use our tools to support the economy and a strong labor market and to prevent higher inflation from becoming entrenched,” Mr. Powell said.
Consumer prices have spiked in the past year to their highest levels in four decades. The Fed is expected to raise interest rates in the coming months in an effort to address inflation and a tight labor market.
Mr. Powell was first nominated by then-President Donald Trump, and President Biden has tapped him to remain in the post for another term.
Sen. Pat Toomey of Pennsylvania, the top Republican on the committee, said he intends to vote to re-confirm Mr. Powell. He said Mr. Powell has “a record of acting thoughtfully and constructively, especially in some very difficult circumstances” during the pandemic.
But Mr. Toomey said inflation is the “new enemy,” and he warned that the Fed must pump the brakes on its monetary policy and stop tolerating high prices.
“I worry that the Fed’s extraordinary response to the crisis could become the new normal for monetary policy,” he said. “The Fed today is still buying government and agency securities. It’s contributed to asset bubbles, distorted markets.”
Mr. Toomey also chided Mr. Powell for the Fed supporting “politically charged concepts that are irrelevant to its mandate, like global warming or advancing so-called racial justice.”
“If this politicization continues unchecked, it will not end well for the Fed or for independently driven monetary policy,” Mr. Toomey said.
Committee Chairman Sherrod Brown, Ohio Democrat, said Mr. Powell’s re-nomination “represents another step in President Biden’s efforts to rebuild the economy.”
“The president is putting results over partisanship … re-nominating a Federal Reserve chair of the other political party,” Mr. Brown said.
He said the Fed shouldn’t pull back on its support of the economy during the pandemic.
“When people talk about cooling off the economy, what they really mean is making it harder for people to find jobs, and stopping paychecks from growing,” he said. “The cooling off never seems to extend to corporate profits or executives’ [pay].”
• Dave Boyer can be reached at dboyer@washingtontimes.com.
Please read our comment policy before commenting.