By MARTIN CRUTSINGER AP Economics Writer
WASHINGTON (AP) – Federal Reserve Chairman Jerome Powell is preparing to tell Congress that the current spike in U.S. inflation has turned out to be bigger and longer than expected.
But, in remarks prepared for delivery on Tuesday, he says that if inflation does not ease, the Fed is ready to use its tools to reduce the pressure on prices.
Powell is scheduled to appear Tuesday with Treasury Secretary Janet Yellen in a watchdog hearing on massive government support programs adopted to deal with the COVID pandemic. The Fed made Powell’s remarks public on Monday evening.
âAs the economy continues to reopen and spending rebounds, we are seeing upward pressure on prices, particularly due to supply bottlenecks in some sectors,â Powell said in his remarks. prepared remarks. âThese effects have been larger and longer lasting than expected, but they will subside, and as they do, inflation is expected to fall back towards our longer-term target of 2%.
Powell is expected to face tough questions about inflation, especially from Republican lawmakers, who warn the country could experience the kind of runaway inflation not seen since the 1970s.
In recent months, consumer prices have posted 12-month gains of 5.4%, an unprecedented rate since 2008.
Powell said the unprecedented process of reopening the economy after COVID shutdowns has resulted in a number of issues that could continue in the months to come.