Bidenflation has gotten so bad that now Jerome Powell, the Fed Chair and one who long insisted that inflation was only “transitory,” is finally admitting that the inflation crisis poses a severe threat to the job market.
That comment came during a hearing with the Senate Banking Committee, which is considering his nomination for a second 4-year term. During the hearing, Powell said “If we have to raise interest rates more over time, we will,” implying that the Fed will go to whatever lengths are necessary to start cracking down on the inflation threat by raising rates.
We’ll see if that line is held when markets start to tank, but still it’s instructive that the Fed is even considering massive rate hikes to kneecap inflation.
Additionally, he reportedly said that “High inflation is a severe threat to the achievement of maximum employment,” which means that, even if just for show, he’s at least starting to wake up to the inflation threat and recognizes that far from being transitory or unimportant, it poses a critical threat to the economy.
Adding more context to that comment on inflation and employment levels, the AP reports that:
In his testimony, Powell rebuffed suggestions from some Democratic senators that rate increases would weaken hiring and potentially leave many people, particularly lower-income and Black Americans, without jobs. Fed rate increases usually boost borrowing costs on many consumer and business loans and have the effect of slowing the economy.
But Powell argued that rising inflation, if it persists, also poses a threat the Fed’s goal of getting nearly everyone wants a job back to work. Low-income families have been particularly hurt by the surge in inflation, which has wiped out the pay increases that many have received.
Further, Powell reportedly instructed the spendthrift senators on the basic fact that continued economic expansion is necessary for full employment and that controlling inflation and pushing it back down before it becomes entrenched is critical for supporting that continued economic expansion.
Also, echoing his comment on raising interest rates, he reportedly enunciated that if the Fed needs to sharply raise interest rates, an act that could negatively impact hiring and growth in the short term, to fight back against inflation, then it would do so.
Surprisingly, many in the committee were supportive of Powell’s comments. For example, the AP reports that both Ohio Democratic Sen. Sherrod Brown and Pennsylvania Senator Pat Toomey had positive things to say about both Powell and his comments.
Toomey, for example, said that “There is broad bipartisan backing for Chairman Powell’s re-nomination.”
However, what appears to have been left out during Powell’s testimony is the fact that Powell was, up until quite recently, describing inflation as “transitory.” In fact, it wasn’t until the end of November, months after the inflation crisis began, that Powell said “I think it’s — it’s probably a good time to retire that word,” meaning “transitory.” Until then, he seemed far less concerned with the inflation threat than the average American.
So, though Powell is now acting responsibly, it’s concerning that he was so insouciant about the inflation threat for so long and that he hasn’t explained why he made that error.