By Dan McCaleb, The Center Square
Federal Reserve Chairman Jerome Powell told the U.S. Senate Banking Committee Tuesday that elevated inflation poses a “severe” threat to U.S. jobs and economic recovery.
The Fed may raise interest rates more than originally planned to reduce rising prices.
“If we have to raise interest rates more over time, we will,” Powell said. “High inflation is a severe threat to the achievement of maximum employment.”
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Americans are paying more for gasoline, groceries and other products in recent months, as the cost of production and distribution has risen.
Producer Price Index data released in December showed final demand – the price index on goods and services for producers – rose 0.8% in November alone with a 9.6% spike in the past year.
This is the biggest increase in these numbers since 2010, when the federal government started keeping records.
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The Consumer Price Index (a key indicator of inflation) has also risen at its fastest pace in almost 40 years.
The Department of Labor’s Bureau of Labor Statistics released data in December showing a 6.8% increase in prices in the previous 12 months.
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Powell indicated Tuesday that the rising demand for consumers and the current supply chain crisis contribute to higher inflation.
“We can affect the demand side, we can’t affect the supply side. But this really is a combination of the two,” Powell told committee members.
In November, President Joe Biden nominated Powell for a second term as the head of the central bank. He must be confirmed by the Senate.
Syndicated with permission from The Center Square.