Fed Chairman Jerome Powell said Wednesday he still sees the soaring interest rate, and also voiced his concern over the Russian invasion of Ukraine.
Calling the Ukraine war a “game changer”, Powell talked about the labor market getting constricted and said inflation will continue rising well above the Fed’s 2% target.
He was addressing the House Financial Services Committee in Congress. Federal Reserve Chair Jerome Powell Wednesday signals the rising prices and the need to bring about a equilibrium between the ever-peaked U.S. inflation and the pot boiling geopolitics which has found its ground on the European soil as Russia unabashedly penetrates Ukraine. He expressed his concern over the central bank’s outlook as it would have to adjust the interest rates accordingly in a “careful” manner ahead of their upcoming meeting in March.
At the same time, he forewarned that the hike in inflation must become commonplace for some time before taking a dip. Addressing the House Financial Services Committee, Powell brandished the Russian invasion of Ukraine as a total “game changer” that can single-handedly dictate the market scene.
“The implications for the U.S. economy are highly uncertain, and we will be monitoring the situation closely,” Powell said. He added, “The near-term effects on the U.S. economy of the invasion of Ukraine, the ongoing war, the sanctions, and of events to come, remain highly uncertain,” he added. “Making appropriate monetary policy in this environment requires a recognition that the economy evolves in unexpected ways.
We will need to be nimble in responding to incoming data and the evolving outlook. “We will use our policy tools as appropriate to prevent higher inflation from becoming entrenched while promoting a sustainable expansion and a strong labor market,” he said. “We have phased out our net asset purchases.
With inflation well above 2 per cent and a strong labour market, we expect it will be appropriate to raise the target range for the federal funds rate at our meeting later this month.”, Powell said, talking about the feds’ take on handling the rising inflation.