Fed chairman Jerome Powell has reaffirmed the regulator’s hawkish course and positively evaluated the preliminary results of his policy.
During a press conference, Powell noted that the Fed strategy is being successfully adapted to changing conditions. According to the Fed chairman, the decision to end the asset purchase program was enacted in a timely manner. “The labor market has made remarkable progress and, by many measures, is very strong. Labor demand remains historically strong. With constraints on labor supply, employers are having difficulties filling job openings, and wages are rising at their fastest pace in many years. We are attentive to the risks that persistent real wage growth could put upward pressure on inflation,” Powell said. When asked about raising the interest rate, the Fed chairman clarified that the federal funds rate is the regulator’s primary means of adjusting monetary policy. He also noted that the Federal Reserve is willing to “move sooner and perhaps faster”, and that the central bank is considering hiking the rate in March.
Jerome Powell stated that the economy has shown great strength and resilience in the face of the pandemic. However, the Omicron strain was likely to weigh down on economic growth in the current quarter, he said. The Fed chairman expected supply chain issues to ease in the second half of 2022, but semiconductor shortages could persist until 2023. According to Powell, high inflation, which is currently well above the target level of 2%, remains a problem. The economic impact of the pandemic is one of the main causes of soaring inflation. As more people get vaccinated, price growth is expected to return to the target level, the chairman concluded.
