The chairman of the Rizab Alliance, Jerome Powell, announced that the parliament of congress today that the central bank has a goal to reduce inflation and has the power to make it happen.
The Fed chair in a speech to the Senate Banking Authority said, “We understand the difficulties faced following high inflation. Instead, the Fed is committed to bringing inflation down again, and is moving appropriately to do so.” He added, "The Fed has both the tools we need and the wisdom needed to restore price stability."
Together with pointing out the harshness of inflation, Powell said the state of the economy was generally seen as encouraging, with a strong labor market and continued high demand.
"In the coming months, we will look for solid evidence that inflation will fall, in line with the inflation target of 2%." He added, “We assume that a continuous increase in rates is reasonable; the rate of change will continue to depend on the latest data and the prospects for a developing economy.”
He stated that the war in Ukraine and the Covid-related economic shutdown in China had added to inflationary pressures and added other problems to the U.S. that hurt the economy.
Powell's statement is part of a congressionally mandated semiannual report on monetary fundamentals. Over the past three quarters, the central bank has raised its pooled rate of 150 principals in an effort to deal with inflation growing at the fastest annual rate in more than 40 years.
Powell has made it clear that he believes a tighter monetary base would be an effective tool against inflation. However, a rift has shown in the economy this year that points to higher levels in the future as the economy has slowed down.
