Powell admits that inflation is ‘well above’ the target and talks about ‘challenges’

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the president of Federal Reserve (Fed, the US central bank) Jerome Powell said on Thursday, 15, that the monetary authority faces challenges in deciding how to react to the current level of inflation in the United States, which is “well above” what the institution expected.

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In testimony before the Senate Banking Committee, Powell said that if the temporary nature of the price scale were confirmed, there was no reason to take further action. “The inflation we have right now is not moderately above 2%, it’s way above,” commented the Fed leader, who added that he was “not comfortable” with the move.

Powell also highlighted that the closing of schools due to the pandemic is one of the factors that explain the still high unemployment in the country.

Public debt

Jerome Powell reiterated that public debt in the United States “is not on a sustainable path”. During testimony in the Senate, Powell said that, at some point, it will be necessary to stabilize the indebtedness, but he considered that this should happen when the economy is fully recovered from the crisis caused by the coronavirus.

Powell, however, commented that there is no evidence of significant problems in financing the fiscal deficit in the short to medium term, as “the dollar is still the global reserve currency”.