The higher prices and hiring difficulties seen as the U.S. economy reopens from the pandemic could prove "more enduring than anticipated," and the Federal Reserve would move against unchecked inflation if needed, Fed chair Jerome Powell said in remarks prepared for delivery to the Senate banking committee on Tuesday.
"The process of reopening the economy is unprecedented, as was the shutdown. As reopening continues, bottlenecks, hiring difficulties, and other constraints could again prove to be greater and more enduring than anticipated, posing upside risks to inflation," Powell said. "If sustained higher inflation were to become a serious concern, we would certainly respond and use our tools to ensure that inflation runs at levels that are consistent with our goal."
Powell's testimony also repeated key points from the Fed's policy meeting last week, including that strong economic growth is expected to continue this year even as some parts of the economy have been slowed by the surge this summer of the coronavirus Delta variant.
© 2021 Thomson/Reuters. All rights reserved.