America’s top two economic officials told Senators on Wednesday that the economy is healing but still in a deep hole, and that continued government support is providing a critical lifeline to families and businesses.
Jerome H. Powell, the Federal Reserve chair, and Janet L. Yellen, the Treasury Secretary and Mr. Powell’s immediate predecessor at the Fed, are testifying before the Senate Banking Committee. Their comments echo their testimony before House lawmakers on Tuesday.
Mr. Powell said in prepared remarks that the government averted the worst possible outcomes in the pandemic economic recession with its aggressive spending response and super-low Fed interest rates.
“But the recovery is far from complete, so, at the Fed, we will continue to provide the economy the support that it needs for as long as it takes,” he said.
Ms. Yellen is likely to face questions about the Treasury’s administration of the recently passed $1.9 trillion relief package. Her Treasury Department has been racing to distribute $1,400 checks to millions of Americans, posing a test for Ms. Yellen’s team, which is not yet fully in place.
She could also field questions on the prospects for future legislation, after news broke this week that the Biden administration is making plans for a $3 trillion infrastructure package.
Both policymakers may need to speak about the prospects for inflation, which some prominent analysts have warned could pick up as the government spends big in a rebounding economy. Mr. Powell has consistently pushed back on such concerns.
“We do expect that inflation will move up over the course of this year,” Mr. Powell said on Tuesday. “Our best view is that the effect on inflation will be neither particularly large nor persistent.”
Source: Read Full Article