By Dan McCaleb (The Central Square)
Federal Reserve Chairman Jerome Powell told the United States Senate Banking Committee on Tuesday that high inflation poses a “serious” threat to jobs and economic recovery in the United States.
He also said the Fed would hike rates more than initially expected if necessary to slow the rise in prices.
“If we have to raise interest rates more over time, we will,” said Powell. “High inflation is a serious threat to achieving maximum employment.”
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Americans have paid significantly more for groceries, gasoline and other consumer goods in recent months as the costs of production, distribution and more have risen.
Producer price index data released in December showed final demand – the price index for goods and services for producers – rose 0.8% in November alone, peaking by 9.6% last year.
This is the largest increase since the federal government began tracking these numbers in 2010.
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At the same time, the consumer price index, a major indicator of inflation, has increased at the fastest rate in almost 40 years.
The Department of Labor’s Bureau of Labor Statistics released data in December showing a 6.8% increase in prices over the previous 12 months.
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Powell said on Tuesday that growing consumer demand combined with the supply chain crisis is both contributing to rising inflation.
“We can affect demand, we can’t affect supply. But it’s really a combination of both,” Powell told committee members.
In November, President Joe Biden nominated Powell for a second term as head of the central bank. The Senate must reconfirm it.
Syndicated with permission from The Center Square.