HIGH inflation is taking a toll on American families, U.S. Federal Reserve Chair Jerome Powell acknowledged in remarks to be delivered at a congressional hearing set to take place yesterday. “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,” Powell said in prepared testimony that was made public Monday. The Senate Banking Committee was set to hold a hearing on Powell’s nomination to a second four-year term yesterday. U.S. President Joe Biden announced Powell’s reappointment in late November. Inflation has soared to the highest levels in four decades, and the U.S. Government is expected to report that consumer prices jumped 7.1 percent over the past 12 months, up from November’s 6.8 percent annual increase. Powell’s nomination is likely to be approved by the Senate with bipartisan support but members of Congress are sure to interrogate Powell on whether the Fed can successfully take steps to rein in inflation without slowing the economy so much that it falls into recession. Economists and former Fed officials, are increasingly raising concerns that the Fed is behind the curve on inflation. Last Friday’s jobs report, which showed a sharp drop in the unemployment rate to a healthy 3.9 percent, and an unexpected wage increase, has fanned those worries. While lower unemployment and higher pay benefit workers, those trends can potentially fuel rising prices. At its last meeting in December, Powell said the central bank is rapidly accelerating its efforts to tighten credit with the goal of reining in inflation. The Fed will stop buying billions of dollars of bonds in March, ahead of its previously announced goal of doing so in June. Those bond purchases are intended to encourage more borrowing and spending by lowering longer-term rates. Fed officials now expect to hike short-term interest rates three times this year, a sharp shift from September, when they were split over doing it even once. Economists increasingly expect them to raise rates at least four times in 2022. Powell also said in his prepared remarks that the U.S. job market is “strong” and the economy is “expanding at its fastest pace in many years.” But he also suggested that the economy has suffered some longer-term damage from the pandemic. “We can begin to see that the post-pandemic economy is likely to be different in some respects,” Powell said. “The pursuit of our goals will need to take these differences into account.”(SD-Agencies) | 