Federal Reserve Chairman Jerome Powell pledged on Wednesday “very strong support” to complete the US economic recovery from the Corona virus pandemic.
Testifying before the US House of Representatives Financial Services Committee, Powell said he was confident that the recent price hikes were linked to the country’s reopening after the pandemic and would fade, and that the House should keep its focus on getting as many people back to work as possible.
Powell stressed that any move to reduce the support provided to the economy, first by slowing the pace of US Central Bank bond purchases worth 120 billion dollars per month, is still “a distant matter”, as millions of people who were working before the crisis still have to be included in the labor market.
“High inflation readings are from a small group of goods and services directly related to reopening,” Powell said in his testimony, in tone that suggested he saw no need to rush a shift toward pre-pandemic policy.
US Treasury yields rose after the publication of Powell’s prepared testimony earlier yesterday, and remained low even though factory input prices rose at a higher-than-expected pace in June, an indication that markets interpreted as a sign that the monetary stimulus taps will remain open.
Powell’s comments were devoid of any mention of risks threatening recovery from the new strain of the Corona virus, while the Chairman of the Reserve Board said that the central bank expects strong gains to come in jobs “with continued improvement in public health conditions.”