×

Fed’s Powell says high inflation temporary, will ‘wane’

ap photo Federal Reserve Chairman Jerome Powell, right, testifies before the Senate Banking Committee on Capitol Hill in Washington in 2020. The economy is growing at a healthy clip, and that has accelerated inflation, Federal Reserve Chair Jerome Powell says in written testimony delivered Tuesday at a congressional oversight hearing.

WASHINGTON — Federal Reserve Chair Jerome Powell on Tuesday responded to concerns from Republican lawmakers about spiking inflation by reiterating his view that current price increases will likely prove temporary.

Consumer prices jumped 5 percent in May compared with a year earlier, the largest increase in 13 years. Republican House members have sought to blame higher inflation on President Joe Biden’s $1.9 trillion economic relief package, approved in March, in an effort to retake the House next year.

“The Biden inflation agenda of too much money chasing too few goods is causing major harm to hardworking families,” said Louisiana Rep. Steve Scalise, the second-ranking Republican House leader.

Powell avoided participating in such policy debates, despite attempts from both Democrats and Republicans to draw him in.

But he said in testimony before a congressional oversight panel that recent price gains mostly reflected temporary supply bottlenecks, and the fact that prices fell sharply last spring at the onset of the pandemic, which make inflation figures now, compared with a year ago, look much larger.

Most of the price gains have occurred in categories such as used cars, airplane tickets, and hotel rooms, Powell said, where demand has soared as the economy has quickly reopened, catching many companies flat-footed.

“Those are things that we would look to, to stop going up and ultimately to start to decline as these situations resolve themselves,” Powell said. “They don’t speak to a broadly tight economy — the kind of thing that has led to high inflation over time.”

Powell acknowledged that “these effects have been larger than we expected and they may turn out to be more persistent than we expected.” But he added that “the incoming data are very much consistent with the view that these are factors that will wane over time and then inflation will then move down toward our goals.”

Newsletter

Today's breaking news and more in your inbox

I'm interested in (please check all that apply)
   

Starting at $4.38/week.

Subscribe Today