Fed Chair Jerome Powell spent Wednesday and Thursday defending the central bank’s ultra-dovish monetary policy, as he faced a bombardment of questions from irritated Republicans and Democrats alike in response to skyrocketing inflation.
In a series of prepared explanations to questions from lawmakers, Powell asserted that the US economy still has a long ways to go before the Fed can even begin to seriously contend the potential tapering of its asset purchases or cutting borrowing rates. As pressure began to mount regarding the latest blazing-hot CPI data showing price pressures at the highest in over 30 years, Powell once again said there is no cause for serious concern, because the Fed has all the tools it needs in the event that inflation proves to be a bit more persistent.
“I know people are very worried about inflation,” Powell said. “We hear that loud and clear from everybody . . . it is really going through the economy and through every business.” Although he did acknowledge that inflation has indeed “increased notably,” he once again reiterated that it will subside eventually. However, during the entirety of the three-hour long interview, Powell did not provide any insight on what such action from the Fed may look like if inflation does seep into the long-run.
In fact, Powell said he’s not even concerned about the surge in the cost of living, given that any such price pressures have been confined to only a select-few sectors, such as used vehicles and shelter (you know, the things that Americans are actually buying). Instead, he said that he will only become concerned once the price pressures trickle into more broader categories and become widespread.
But, as gold bug Peter Schiff eloquently explains, “by then, its too late.”
Information for this briefing was found via Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.