Fed Chairman Powell warns Congress that inflationary pressures may last longer than expected

Federal Reserve Chairman Jerome Powell warned in remarks to be delivered Tuesday lawmakers in Washington that the reasons for the recent rise in inflation may last longer than expected.

In a speech he will deliver to the Senate Banking Committee, the central bank governor said economic growth “has continued to strengthen” but has been met with upward price pressures caused by supply chain bottlenecks and other factors.

“Inflation is high and is likely to remain so for months to come before it eases,” Powell said. “As the economy continues to reopen and recycle spending, we are seeing upward pressure on prices, especially due to bottlenecks in supply in some sectors. These effects have been greater and longer lasting than expected, but they will abate and as they do, Inflation is expected to fall back towards our long-term 2 percent target. “

The remarks are part of the mandated testimony Powell is to give to Congress regarding the Fed’s economic response to the Covid-19 pandemic. He is speaking Wednesday to the House Financial Services Committee.

Following its meeting last week, the Fed announced it soon begins to retreat on some of the stimuli it has provided during the crisis. However, officials have stressed that the reduction in monthly asset purchases is does not mean threatening interest rate rises.

“We in the Fed will do everything we can to support the economy as long as it takes to complete the recovery,” Powell said.

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