The president of the Federal Reserve (Fed), Jerome PowellHe said he continues to expect high inflation to recede over the next year as supply and demand become better balanced, but cautioned that prices could continue to rise for longer than previously thought.
“It is difficult to predict the persistence and effects of supply constraints, but it now appears that the factors driving inflation upward will persist well into next year,” Powell said in testimony prepared to be presented to the Commission Tuesday. Bank of the United States Senate and published on Monday by the Fed.
“Also, with the rapid improvement in the labor market, slack is decreasing and wages are increasing at a rapid rate,” he added.
The recent increase in cases of COVID-19 Together with the emergence of the new omicron variant they pose “downside risks” to employment and economic growth, and “greater uncertainty for inflation,” Powell added.
Powell insisted that the Fed “is committed to our objective of price stability” and will use it to support the economy and the labor market, but also to avoid any inflation spiral.
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