Federal Reserve Chair Jerome Powell, under consideration for a second four-year term leading the central bank, assured lawmakers Tuesday that he’s willing to do what it takes to bring down inflation.
Saying the central bank will act “to prevent higher inflation from becoming entrenched,” Powell told the Senate Banking Committee that the economy is rapidly healing and that he was optimistic that bottlenecks in the supply chain will ease in the coming months, reducing inflationary pressure. And if inflation does persist, Powell said the bank is ready to respond. “If we have to raise interest rates more over time, we will,” he said. “We will use our tools to get inflation back.”
Fed officials have signaled that they expect to raise interest rates three times this year, with the first increase coming as soon as March. Powell’s comments hint at the possibility of a fourth increase, should conditions warrant it.
Officials have also indicated that they may start to shrink the central bank’s balance sheet this year as part of the effort to reduce monetary support for the economy. Powell said that the process could begin “perhaps later this year.”
