America Faces No Greater Threat Than Joe Biden and the Democrat Party. Their Assault to Our Borders Is As Great As Their Assault to Free Speech and Free Elections
Tuesday, November 30, 2021
BANKSTER JEROME POWELL SAYS BIDENOMICS TRICKLE UP ECONOMIC IS WORKING - BIG PROFITS MADE FROM BIDENFLATION AND BANKSTER BAILOUTS AROUND THE CORNER!
DOES ANYONE THINK BIG OIL IS NOT RAKING IT IN?!?
Powell Says It’s Time to Retire The Word ‘Transitory’ for Inflation
Federal Reserve Chair Jerome Powell said that it is time to stop using the word ‘transitory’ to describe the high and rising inflation that has beset the U.S. economy in the first year of the Biden presidency.
Powell made the comment Tuesday in response to questions during a Senate Banking Committee hearing in Washington. Powell first used the word transitory to describe inflation this spring, when prices began to rise more than expected. At the time, Fed officials believed inflation would stay confined to a few goods that were experiencing supply chain constraints and fade over the coming months.
Since then, supply chain problems have worsened and inflation has accelerated. Fed officials and most economists now see high inflation and supply chain problems lasting well into 2022. At Tuesday’s hearing, Powell said that high and persistent inflation may mean it is appropriate for the Fed to speed up the tapering of its asset purchases.
Critics have said that the Fed’s approach risks losing control of prices. In addition to describing inflation as transitory, the Fed has adopted a new approach to inflation—known as Flexible Average Inflation Targeting, or FAIT—that allows for inflation to run above its two percent target for some time if inflation had been running lower in earlier periods so that the average over time approximates the target. At Tuesday’s hearing, Senator Pat Toomey (R-PA) criticized this approach for being too vague because it does not specify either how far above target or how long above-target inflation should be allowed to run.
“I know you believe this is transitory. But everything is transitory. Life is transitory. How long does inflation have to run above your target before the Fed decides maybe it’s not so transitory?” Toomey, the panel’s ranking member, asked.
Powell replied that the test for FAIT’s threshold has “absolutely been met now.”
“Inflation has run well above two percent for long enough that, if you look back a few years, inflation averages two percent,” Powell said. He added that had not been the case for many years prior to the pandemic when inflation typically undershot the Fed’s goals and some economists had begun to question whether the Fed was capable of raising inflation up to two percent given what appeared to be persistent deflationary pressures from around the global economy.
Powell then went on to lay ‘transitory’ to rest.
“So I think the word ‘transitory’ has different meanings to different people. To many it carries a sense of ‘short-lived.’ We tend to use it to mean that it won’t leave a permanent mark in the form of higher inflation,” Powell said. “I think its probably a good time to retire and try to explain more clearly what we mean.”
Powell’s answers to questions from senators lead many investors to the conclusion that the Fed would likely now move more quickly, in part because it views the pandemic as a greater risk to the supply side of the economy and therefore an inflationary force. Prior to the panel, investors were divided about whether references to the omicron variant in Powell’s prepared remarks were an indication that the Fed was considering accelerating the taper or whether they meant the Fed would backoff for fear of a drag on demand from a potential new wave of infections.
Stocks sold off on this hawkish interpretation of Powell’s testimony. The Dow Jones Industrial Average sank by more than 662 points, or around 1.9 percent, by midday.
Fed Chair Powell: 'Factors Pushing Inflation Upward Will Linger Well Into Next Year'
Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell testify at an earlier hearing of the Senate Banking, Housing and Urban Affairs Committee. (File Photo by KEVIN DIETSCH/POOL/AFP via Getty Images)
(CNSNews.com) - Although "the economy has continued to strengthen," inflation will persist "well into next year," Federal Reserve Chairman Jerome Powell told the Senate Banking Committee on Tuesday.
In his opening statement, Powell blamed the situation on pandemic-related supply and demand imbalances:
Supply chain problems have made it difficult for producers to meet strong demand, particularly for goods. Increases in energy prices and rents are also pushing inflation upward.
As a result, overall inflation is running well above our 2 percent longer-run goal, with the price index for personal consumption expenditures up 5 percent over the 12 months ending in October.
Most forecasters, including at the Fed, continue to expect that inflation will move down significantly over the next year as supply and demand imbalances abate. It is difficult to predict the persistence and effects of supply constraints, but it now appears that factors pushing inflation upward will linger well into next year.
Powell noted that inflation imposes "significant burdens," especially on people who struggle to pay for food, housing and transportation.
"We are committed to our price-stability goal," Powell said. "We will use our tools both to support the economy and a strong labor market and to prevent higher inflation from becoming entrenched."
Then there's the COVID wild card:
"The recent rise in COVID-19 cases and the emergence of the Omicron variant pose downside risks to employment and economic activity and increased uncertainty for inflation," Powell said. "Greater concerns about the virus could reduce people's willingness to work in person, which would slow progress in the labor market and intensify supply-chain disruptions.
"To conclude, we understand that our actions affect communities, families, and businesses across the country. Everything we do is in service to our public mission. We at the Fed will do everything we can to support a full recovery in employment and achieve our price-stability goal."
Yellen hails 'bold relief measures'
Testifying alongside Powell, Treasury Secretary Janet Yellen told the committee, "Our economic recovery is on track." She pointed to monthly job growth, the low unemployment rate, and passage of the bipartisan infrastructure bill.
Yellen also credited the "bold relief measures" passed by Congress -- and the successful implementation of those relief laws by the Treasury Department -- for preventing a slide into recession.
First, the American Rescue Plan’s expanded Child Tax Credit has been sent out every month since July, putting about $77 billion in the pockets of families of more than 61 million children. Families are using these funds for essential needs like food, and in fact, according to the Census Bureau, food insecurity among families with children dropped 24 percent after the July payments, which is a profound economic and moral victory for the country.
Meanwhile, the Emergency Rental Assistance Program has significantly expanded, providing much-needed assistance to over 2 million households. This assistance has helped keep eviction rates below pre-pandemic levels. This month, we also released guidelines for the $10 billion State Small Business Credit Initiative program, which will provide targeted lending and investments that will help small businesses grow and create well-paying jobs.
Yellen said she sees two major decisions looming in December: the need for Congress to raise the debt limit; and passage of the partisan Build Back Better Act.
"I applaud the House for passing the bill and am hopeful that the Senate will soon follow. Build Back Better is the right economic decision for many reasons. It will, for example, end the childcare crisis in this country, letting parents return to work.
"These investments, we expect, will lead to a GDP increase over the long-term without increasing the national debt or deficit by a dollar. In fact, the offsets in these bills mean they actually reduce annual deficits over time."
No comments:
Post a Comment