The president of the American Central Bank Jerome Powell will promise Tuesday, in front of the Snat, to do everything during his second mandate to prevent inflation from taking root in the United States.
President Joe Biden announced on November 22 that he had been reappointed for a second four-year term, but he has yet to receive confirmation from Snat.
Mr Powell is credited with taking the swift and radical steps necessary to keep the economy afloat during the historic recession caused by the Covid-19 pandemic, so that his confirmation is not threatened.
But Americans’ heightened frustration with soaring prices is likely to push Congress to grill the boss of the Federal Reserve (Fed) a Republican who had been appointed by former President Donald Trump on how the Fed plans to operate. take it to stem inflation.
We will use our tools to support the economy and a strong labor market and to prevent inflation from taking hold, he said in a speech prepared in advance and released on Monday, without further details.
Consumer prices in the United States rose at an unbeatable pace in November in nearly 40 years, 6.8% last month compared to November 2020.
Data for the month of December will be released on Wednesday.
Jerome Powell will express his support for the poorest households hard hit by the rise in prices that affect essential products such as food, shelter and transport.
We are strongly determined to achieve our statutory objectives of maximum employment and price stability, he also said.
For Jay Powell, however, the path to follow is difficult because the main tool is to increase interest rates.
However, if the Federal Reserve (Fed) increases them too quickly, the economy could weaken and even sink into recession, destroying hopes of the maximum employment target.
Acting too slowly to contain price spikes could lead to even higher inflation.
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Either scenario would also be a nightmare for Democrats under President Joe Biden in a midterm election year.
And in any case, a rate hike will not have an immediate effect.
Jerome Powell should also be questioned by Senator Elizabeth Warren on the stock market activity of Fed officials.
A series of revelations on important transactions carried out by several of them, including Jerome Powell, although legal but during the economic crisis linked to Covid-19, shocked public opinion in the fall.
This had led to the resignation of the regional chairmen of the Boston Fed, Eric Rosengren, and Dallas, Robert Kaplan. And led new internal rules.
Massachusetts Democrat Senator Elizabeth Warren asked the Fed in a letter sent on Monday to release more information on the operations.