WASHINGTON (Reuters) – Federal Reserve Chairman Jerome Powell will appear at Congress Tuesday to update lawyers on an economy that is still recovering from the pandemic but may be that it will be ready later this year if the U.S. vaccine program hits its mark.
The hearing is expected to begin before the Senate Banking Committee, one of the Fed chief’s orders twice a year on Capitol Hill, at 10 a.m. EST (1400 GMT) and is the first since the Democrats won the White House and controlled both chambers of Congress.
It is likely to focus on the tension between a pandemic that has left more than half a million U.S. lives and left millions unemployed, and an economy flowing with savings and central bank support, and going to get a new gusher of federal spending.
The growing likelihood that Congress will deliver President Joe Biden’s $ 1.9 trillion stimulus plan has raised concerns about a possible spike in inflation and overheating in asset markets, but Powell ‘s message to lawyers is likely to be familiar: don’t give up gas.
Even with Americans receiving the vaccine at a rate of more than 1.5 million per day and coronavirus cases falling, Powell and his fellow Fed policymakers are instead targeting the nearly 10 million jobs a day. it is missing from the economy compared to a year ago, and the strong threats remain posed by the virus.
They have pledged to keep interest rates low and use other monetary policy tools to overcome a labor market faster. Two weeks ago, Powell pushed for “society-wide commitment” to that goal – a boost for lawyers debating Biden’s incentive plan.
The scale of the proposed stimulus, coming in the wake of about $ 4 trillion in federal aid and the purchase of heavy bonds by the Fed last year, has reduced inflation hawk feathers and criticized a bank US media has boosted stock prices and more. assets to unstable levels.
Fed officials are united on that front. They do not see inflation as a threat, and look at much of the recent rise in stock prices, for example, as a sign of market confidence in economic recovery following a pandemic, not. artificial money-driven artificial run.
Tuesday’s hearing, which appears to be Powell’s appearance before the House of Representatives’ Financial Services Committee on Wednesday, may also give a measure of what he expects to remain as Fed chief when his current four-year term ends early. next year.
Biden will have to decide in the coming months whether to reinstate Powell, who was chosen for the post by former President Donald Trump. The nomination is subject to confirmation by the Senate.
Reciting with Howard Schneider; Edited by Paul Simao