Fed chair Powell testifying before the House financial services committee

Fed Powell

Fed chair Powell and Treasury Secretary Ellen have switched to the House of Representatives where he is testifying before the House financial services committee.

Some highlights of Powell's Q&A:

  • inflation is spread more broadly
  • risk of persistent inflation has risen
  • inflation we are seeing is still clearly connected to pandemic
  • we just have moved up significantly, but we don't see that moving up at a troubling rate that would spark inflation
  • we need to move on from the word "transitory"
  • risk of higher inflation of moved up
  • the economy is very strong
  • price stability and jobs are in tension. We need to balance them. We will use the tools to make sure high inflation does not become entrenched
  • you are seeing higher inflation across the world
  • the higher inflation is mostly due to reopening of the economy
  • our forecast is for inflation to come down meaningfully in the second half of next year
  • I think it is likely inflation will come down then
  • we cannot act like we are sure that will happen with inflation and next year
  • we have to use our policy tools to tackle range of possible inflation
  • inflation has been more persistent and higher than expected
  • the taper need not be disruptive event in markets; do not expected to have a big impact
  • it is appropriate to consider at the next meeting to taper faster to wrap it up earlier
  • we are deep into dialogue with big financial firms on climate risk
  • we see stimulatory aspect of fiscal will diminish and become a headwind next year
  • we are looking at another strong year next year in terms of growth
  • we also see supply-side rising to meet demand next year, as supply chains become untangled

Treas. Sec Yellen:

  • there are still many people particularly low income workers, who don't feel confident about health consequences of working
  • those people may come back as pandemic recedes
  • many fewer Americans with incomes below $400 K will be audited by IRS under build back better plan