The Federal Reserve Chair told members of Congress it could be a “bumpy” ride as they continue to try and get inflation under control.
Chair Jerome Powell said the Fed’s goal was still to get inflation down to 2%. The Fed has raised interest rates multiple times over the past year to try and help cool inflation, and Powell says that may need to happen at a faster rate because inflation is still out of control.
“If the totality of the data were to indicate that faster tightening is warranted, we’d be prepared to increase the pace of rate hikes,” Powell told the U.S. Senate.
Consumer spending and economic data have both been stronger than expected start to 2023, but inflation has remained stubbornly high. The Fed’s outlook for the remainder of the year projects an unemployment rate of around 4.6% by the end of 2023. That number is more than a full point higher than what it is now.
“Chair Powell if you could speak directly to the 2 million hard-working people who have decent jobs who you’re planning to get fired over the next year, what would you say to them? How would you explain your view that they need to lose their jobs?” asked Sen. Elizabeth Warren (D-MA).
“I would explain to people more broadly that inflation is extremely high and it’s hurting the working people of this country badly, all of them, not just 2 million of them, but all of them are suffering under high inflation. And we’re taking the only measures we have to bring inflation down,” Powell replied.
The focus on the economy extended beyond Capitol Hill. The House Ways and Means Committee held a hearing in Oklahoma where business owners talked about the economic squeeze they’re feeling.
“We’ve seen firsthand how out of control costs have gotten in the last several years. Equipment costs have doubled, if you were to construct our building today it would cost at least twice as much, and for supplies we face both rising freight costs and parts on backorder being commonplace,” said Bryan Jackson to the committee. Jackson is a military veteran who owns a meat-packing company in Oklahoma.
Powell told senators in blunt terms that Congress needs to raise the debt ceiling or risk long-term harm to the economy. He faces more tough questions on Capitol Hill this week as he sits in front of a House panel Wednesday.
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