On Wednesday, Federal Reserve Chairman Jerome Powell will testify before Congress about the central bank’s twice-yearly report on monetary policy and the status of the U.S. economy.
Powell will testify before the House Financial Services Committee in a digital hearing at noon EDT to discuss the report, provide an update on the Federal Reserve’s measures to boost the economy after COVID-19, and address worries about increasing inflation.
Over the last year, the central bank has taken numerous efforts to mitigate the budgetary impact of the epidemic, including reducing interest rates and undertaking large-scale purchases of government bonds and mortgage-backed securities.
In its latest monetary policy report, compiled last week, the Federal Reserve says it will continue those policies throughout the recovery process.
“These measures, along with [our] guidance on interest rates and the Federal Reserve’s balance sheet, will help ensure that monetary policy continues to deliver powerful support to the economy until the recovery is complete,” the report states.
Last month, the Fed reversed its March statement that interest rates would remain around zero until 2024, instead announcing that it intends to raise rates twice by the end of 2023.
The meeting on Wednesday comes as the Labor Department released a report on Tuesday showing that consumer prices in the United States climbed by 5.4 percent between June 2020 and last month, the largest 12-month gain in 13 years. The research observed rapidly growing inflation, which is mostly due to a strengthening economy.
“Consumer price inflation has increased notably this spring as a surge in demand has run up against production bottlenecks and hiring difficulties,” the Fed noted in its policy report.
The Fed added, however, that “as these extraordinary circumstances pass,” supply and demand should “move closer to balance” and inflation should likely decrease.
After giving testimony in the House, Powell will appear before the Senate banking committee on Thursday.