Fed Chair Tells Congress Achieving Targets Could Require Three Years

Chairman of the United States Federal Reserve, Jerome Powell, told the House of Representatives that the Fed will only raise interest rates when the economy achieves the employment and inflation targets.

In his testimony to the House Financial Services Committee, Powell said that the Fed is in no hurry to raise rates or reduce the bond-purchasing program.

The Fed Chair vowed to maintain the $120 billion a month asset purchases until substantial progress is made in achieving the inflation 2% target and full employment.

Powell said that he sees no signs that inflation could surge out of control despite expectations for a rise in prices over the upcoming months, but most of such increases are expected to be temporary.

Achieving targets and enhancing economic recovery depends on controlling the Coronavirus pandemic, something that Powell seemed to be optimistic about doing.

“There is a reason for optimism in the second half of the year if we get the pandemic under control.”

However, he indicated that the economy still has a long way to go before achieving the inflation and full employment targets.

“We believe we can do it, we believe we will do it. It may take more than three years.”

Powell did not reveal a clear position regarding the proposed American Rescue Plan, a $1.9 trillion relief bill proposed by President Joe Biden that Democrats are trying to pass through Congress this week, noting that it up to the Congress and the administration to decide on the stimulus package.

Tackling the digital currencies aspect amid a surge in the price of Bitcoin and other cryptocurrencies, Powell suggested that congressional approval might be needed before issuing a digital Dollar.