At the start of his second day of congressional testimony, Powell faced questions from Sherrod Brown, the Democratic senator who serves as chairman of the Senate Banking Committee, about the possibility that the central bank’s efforts to control inflation could lead to disproportionate job losses for ethnic minorities.
“What Fed governors describe as ‘cooling off a strong labor market’, the public describes as layoffs,” Brown said.
“Working families are suffering more directly and faster from inflation,” Powell replied, adding that at this stage, council officials feel that “it would be appropriate to raise interest rates again this year, perhaps twice assuming that the economy performs as expected.”
The way to lower interest rates, he said, is confidence that inflation is coming down.
“We don’t expect that to happen anytime soon. The test for that is if we can be confident that inflation comes back down to our 2% target,” Powell added.
While the average of the latest forecasts by central bankers shows that inflation rates may start to decline next year, Powell said, “We will have to wait for a time when we are confident that inflation will fall to two percent.”
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