Federal Reserve Chair Jerome Powell pledged to do what's necessary to contain an inflation surge and prolong the expansion, while steering clear of fresh details on the path of U.S. monetary policy.
"If we have to raise interest rates more over time, we will," Powell told the Senate Banking Committee Tuesday under questioning at his confirmation hearing for a second term as central bank chief. "We will use our tools to get inflation back."
Both Republicans and Democrats have expressed concern that the Fed is over-stimulating the economy with low rates and bond purchases as inflation runs far above officials' 2% target. U.S. central bankers have been surprised by the persistence of inflation and want to lean against it this year without stalling out growth.
Prices rose 5.7% for the 12 months ending November as measured by the personal consumption expenditures price index, the Fed's preferred benchmark.
Powell's remarks were more guarded than those of some of his colleagues, who've called openly for the Fed to starting raising rates at their meeting in March. But the chair typically tries to avoid providing public policy guidance before he's had a chance to discuss matters with the Fed's policy-setting committee, which next gathers Jan. 25-26.
While stressing that the Fed doesn't prioritize its congressional mandate for price stability more than the goal for full employment, Powell said that the emphasis can shift and at the moment there was more focus on inflation.
'Severe Threat'
"To get the kind of very strong labor market we want with high participation, it is going to take a long expansion," he said. "To get a long expansion we are going to need price stability. And so in a way, high inflation is a severe threat to the achievement of maximum employment."
The hearing underscored the bipartisan support Powell is likely to earn to serve another term starting next month.
President Joe Biden nominated Powell for a second term as chair and picked Fed Governor Lael Brainard to serve as vice chair; her confirmation hearing is scheduled for Thursday. Biden is also expected to soon nominate three new governors to fill remaining vacancies.
