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The Chairman of the Federal Reserve Board of Governors (FRB), Powell, reiterated that the economic recovery will take a long time. He said that even if there were signs of price increases, it would not necessarily lead to the establishment of high inflation.
The president testified in the House Finance Committee on the 24th. “Our policy is accommodative due to the high unemployment rate and the labor market far from maximizing employment,” he explained. “It is true that some assets have shown price increases in some indicators,” he said.
Fed Chairman Powell
Powell cites rising car prices as an example in the tech industry.He explained that semiconductor shortages and supply chain limitations are having an impact.
“This situation does not necessarily lead to inflation, because inflation (rather than a temporary rise in prices) is a process of repeated and continuous price rises every year,” he said.
Several lawmakers also asked about the risk of the economy overheating due to additional government measures and continued support for monetary policy. In response, the president reiterated that it will take a long time for the economy to regain its strength before the new coronavirus turns into a pandemic.
Inflation concerns
Powell noted that the financial authorities expect inflation to increase due to the “base effect” compared to the previous year and the increase in demand associated with the resumption of economic activity. “There is a way to deal with it,” he said.
At the hearing, the president was confident that it could boost inflation and reach an average of 2% during the period.
“We are achievable, we are sure that we will achieve it and we are committed to taking advantage of the means of the authorities to achieve it,” he said. “There is significant disinflationary pressure around the world, with central banks struggling to reach an inflation rate of 2% in virtually all major advanced economies. We can and are confident that we will.”
It promised to release its latest assessment as a financial authority on a quarterly basis, saying it could take more than three years to reach that goal.
The president was also questioned as the opinion of a financial authority on digital currencies.
Regarding the Fed’s research on digital currencies, Powell said: “This year will be an important year.” “It will be a year of very active participation with the public. We are currently holding public events with the intention of actively holding public events. We are working toward the goal.”
Original title:Powell dismisses concerns about rising prices and overheating （抜 粋）
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