Federal Reserve Chair Jerome Powell has run the U.S. central bank for the last four years, but his most significant work may have come in the past two years during the COVID-19 pandemic. President Joe Biden recently nominated Powell to a second term helming the Fed. The Senate Banking Committee will question the bank regulator on Tuesday. They will likely focus on current economic issues like inflation and unemployment, but questions about stablecoin regulation, central bank digital currencies and others may come up.
10:32 a.m. (LL) Powell said the Fed might raise interest rates depending on inflation in response to a question from Toomey: “if we see inflation persisting at high levels longer than expected, then then we will you know, then we’ll, if we have to raise interest rates more over time, we will we will use our tools to get inflation back.”
10:27 a.m. (LL) “What we saw at the end of last very long, longest in our history expansion was that as the labor market tightened, the benefits began to go more broadly to those at the lower end of the income spectrum and to groups that have been more marginalized from an economic standpoint. And that’s that was seen, I think, very broadly as a highly desirable set of outcomes. So our tools do not generally have direct distributional effects, but I do think that we see now, the great benefits that strong labor market can bring to right across the whole population and for the whole economy,” Powell said.
10:25 a.m. (LL) Powell, in his opening remarks, highlighted the economy’s current strength: “We know that high inflation exacts a toll particularly for those less able to meet the higher costs of essentials like food, housing, transportation. We are strongly committed to achieving our statutory goals of maximum employment and price. We will use our tools to support the economy and a strong labor market and to prevent higher inflation from the entrenched. We can begin to see that the post pandemic economy is likely to be different in some respects. on the pursuit of our goals, we’ll need to take those differences into account.”
10:20 a.m. (LL) Sen. Pat Toomey (R-Pa.), the ranking member on the committee, opened his remarks noting the bipartisan support for Powell and the work he did in stabilizing the financial system during the pandemic. He also said the Fed is fighting the “last war” and expressed concerns about the current level of inflation.
“The Fed does not have a mandate to advance politically charged causes that are irrelevant to its mandate, like global warming or advancing so called racial justice,” Toomey said.
10:10 a.m. (ND) Sen. Sherrod Brown (D-Ohio), the Banking Committee’s chair, praised Powell in his opening remarks, discussing his work, as well as the role of the economy in supporting Americans. And there actually was a pretty significant crypto mention right up top: A warning that cryptos and stablecoins might be a risk to the U.S. economy.
“The Fed needs to take seriously the systemic risks that threaten our economic progress, like cryptocurrencies and stablecoins and most importantly, climate change,” Brown said, later adding that crypto bubbles are like risky Wall Street schemes.
10:00 a.m. (ND) This hearing is about to kick off. In his introductory remarks, released Monday, Powell discussed the Fed’s COVID response and financial stability, among other issues.