Fed: Powell is running for a second term with inflation as a priority

The president of the Federal Reserve (Fed) of the United States, Jerome Powell, ran on Tuesday for a second term at the helm, prioritizing the fight against high inflation, although this means putting less emphasis on the goal of full employment.

Powell, who in 2018 acceded to the position at the proposal of the former Republican president Donald Trump, has been nominated by the current president of the United States, Democrat Joe Biden, for a second four-year term at the head of the US central bank and will foreseeably have the support of enough senators to guarantee the position.

The candidate for re-election defended this Tuesday before the Senate committee that values ​​his nomination that the Fed at this time prioritizes the fight against inflation to the achievement of full employment, the two objectives assigned to the central bank.

“There is no legal basis for preferring full employment to price stability or vice versa. They are equal. However, at different times one of them may deviate more from the objective and that is where we should focus a little more.”, He explained Powell in his speech.

“Sometimes it is full employment and sometimes it is inflation. I think now is inflation”Added the Fed chairman.

Asked about the possibility, pointed out by several central bank governors, that during 2022 there will be between three and four increases in interest rates, Powell he limited himself to answering that the agency will use all the tools at its disposal.

The president of the Fed, whose confirmation in the post for another four years seems almost guaranteed to be a figure of sufficient consensus between Democrats and Republicans, rediscovered the roots of the high inflation that the United States lives in an imbalance between the supply and demand of goods to cause of the pandemic.

“We are in high demand in areas where supply is limited, particularly in goods such as automobiles.”, He pointed.

In his opinion, this imbalance will diminish as time goes by, the problems in the supply chain are completely solved and the supply increases enough to respond to the demand. While the Fed it will use its monetary policy tools to mitigate the phenomenon.

“If we see that inflation persists at a high level for longer than expected, we will raise interest rates, even if it has to be more times than expected”, He concluded.

Powell also insisted on the idea that he has already pointed out in his latest interventions that the US economy “no longer need”All the monetary stimulus programs promoted to face the hard blow that the arrival of the pandemic in 2020 caused.

“It is time for us to abandon that emergency situation due to the pandemic and return to a more normal level. We have a long way to go for this”, He pointed.

In December, at the end of its last 2021 monetary policy meeting, the Fed announced that it was accelerating the reduction of its bond purchase program, the economic stimulus that it launched in the face of the crisis caused by COVID-19, and that it planned to eliminate it completely in March 2022.

The central bank governors also decided to leave interest rates unchanged for the time being in the range between 0% and 0.25%, despite the fact that inflation stood at a year-on-year rate of 6.8% in November, the highest figure in almost 40 years in the country.

Precisely tomorrow the United States Bureau of Labor Statistics will publish the year-on-year inflation rate corresponding to December, which could have implications for guiding future decisions of the Fed.