Jay Powell, the chairman of the Federal Reserve, warned that high inflation posed a "severe threat" to a recovery in the US jobs market as he declared the era of pandemic stimulus was over.
In testimony during his Senate confirmation hearing on Tuesday, Mr Powell, who was nominated by President Joe Biden in November to serve a second term leading the Fed, said the economy no longer "needs or wants" the "highly accommodative" policies that have been in place since the onset of the pandemic.
Mr Powell also warned that entrenched inflation could jeopardise what had been a historically strong expansion.
“To get the very strong labour market we want with high participation, it is going to take a long expansion. [And] to get a long expansion, we are going to need price stability,” Mr Powell said.
“High inflation is a severe threat to achieving maximum employment and to achieve the long expansion that could give us that.”
Powell acknowledged the “toll” caused by high inflation, and affirmed the Fed’s intention to use its tools to ensure it did not become a more pernicious problem. – Copyright The Financial Times Limited 2022
