The US economy is temporarily experiencing slightly higher inflation as the economy revives and a lack of supply within some sectors pushes up prices. So Federal Reserve Governor Jerome Powell answered US lawmakers when asked if he was worried about high inflation.
“We don’t think inflation will significantly exceed 2 percent, nor do we think it will stay above that threshold for a long time,” Powell said in his five-page response to a question from Republican Senator Rick Scott of Florida. Scott expressed doubts about the US central bank’s program to buy government bonds, which the Fed joined in response to the coronavirus pandemic outbreak and its effects on the US economy.
Powell assured the senator that the central bank was standing firmly on the ground with both feet and that it was implementing its policy entirely in line with the mandate of maintaining full employment and price stability. The Federal Reserve had already cut its base rate to zero last March, and subsequently launched a $120 billion-a-month program to buy back government bonds and mortgage bonds. Powell also stressed that the Fed’s next policy will be to meet those goals.