The Federal Reserve Chairman Jerome Powell has defended on Thursday the efforts by the central bank to support the U.S. economy amid recovery from the coronavirus pandemic, despite the recent surge in inflation.<\/p>\n\n\n\n
After speaking to the House Financial Services Committee Wednesday, today Powell spoke to the Senate Banking Committee.<\/p>\n\n\n\n
He explained to lawmakers how the Fed is trying to understand the base case and also the risks associated with inflationary pressures.<\/p>\n\n\n\n
\u201cThis is a shock going through the system associated with the reopening of the economy and it is driven inflation well above 2%, and of course we\u2019re not comfortable with that.\u201d<\/p>\n\n\n\n
\u201cTo the extent that it\u2019s temporary it wouldn\u2019t make sense to react to it,\u201d Powell said, reiterating the expected patience by the Fed in adjusting its policy.<\/p>\n\n\n\n
Democrats, led by Senator Elizabeth Warren, criticized the rollback of measures to control the financial sector and especially big banks.<\/p>\n\n\n\n
“Over the past four years, I see one move after another to weaken regulation over Wall Street banks,” Warren said to Powell, who pointed to raising the capital standards under the stress capital buffer.<\/p>\n\n\n\n
“More broadly, I would completely agree that our job is to maintain the strength of these large financial institutions so that we never have to worry about bailing them out again,” Powell explained, pointing to what happened after the global financial crisis.<\/p>\n\n\n\n
Meanwhile, the Republicans seemed more concerned about the Fed\u2019s response to the rising inflation, after the CPI exceeded expectations over the past couple of months.<\/p>\n\n\n\n
It is worth noting that Powell’s term as the Chairman of the Federal Reserve concludes in February, he will have to be re-nominated by President Joe Biden to serve another four-year term.<\/p>\n\n\n\n
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