Powell and Yellen are expected to tell Congress that inflation in the United States will continue to rise for some time.
On Tuesday, two top government financial officials will testify before Congress about the US COVID-19 recovery, stating that inflation would likely harm the economy for longer than previously anticipated.
Beginning at 10 a.m. EDT, Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen will speak before the Senate Banking Committee.
Powell will tell senators that, while the economy is improving, supply chain issues have aided inflation’s ascent and persistence.
In his opening remarks, Powell said, “Inflation is elevated and will likely remain so in the coming months before moderating.”
“We are seeing increased pressure on pricing as the economy starts to reopen and expenditure recovers, particularly due to supply shortages in some industries.
“These effects have been stronger and longer-lasting than predicted, but they will fade, and inflation will fall back toward our longer-term target of 2%.”
Last week, Powell’s Federal Reserve voted to keep key interest rates steady. Since the outbreak of the coronavirus epidemic, the Fed has not raised interest rates.
Yellen will testify that the US economic recovery has been “fragile but quick” – and that the spread of the Delta coronavirus type is posing some challenges. The highly contagious strain has resulted in greater restrictions across the country, which has had an economic impact.
“While our economy continues to expand and reclaim a considerable portion of the jobs lost in 2020, persistent problems posed by the Delta variant continue to impede the pace of recovery and create significant hurdles to a dynamic economy,” Yellen said in her opening statement.
“I am positive about our economy’s medium-term prospects, and I believe we will return to full employment next year. It was never a foregone conclusion that the team would bounce back like this. In fact, the recovery in the United States is stronger than that of other wealthy countries.”
Inflation has been a debating topic among Republicans, such as Senate Majority Leader Mitch McConnell, as well as a focus among progressive Democrats working on a $3.5 trillion spending bill in Congress.
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