US Central Bank President Jerome Powell on Tuesday pledged to act “accordingly” if inflation, currently at an all-time high, were to persist in the second half of this year, preparing public opinion for a rate hike potentially incisive.
Mr. Powell, who had been chosen by former President Donald Trump and whom Joe Biden decided to rename, was auditioned in the Senate for the confirmation of his second four-year term as head of the powerful Federal Reserve ( Fed).
He described an economy on the mend with a job market that is “recovering incredibly quickly” from the crisis the COVID-19 pandemic had plunged him into in the spring of 2020. Workers find jobs easily, in point that every month millions of people quit in order to take a better job and get a better salary.
“Jay” Powell admitted that the return to work of some of the employees remained difficult. Many job vacancies remain vacant and unemployment among minorities also remains very high. But inflation is the most worrying threat today, he said, justifying the series of key rate hikes looming on the horizon.
“It is really time for us to start moving from a pandemic emergency to a more normal level,” he opined. According to him, raising rates should not have a negative impact on the job market. On the contrary, “inflation is a serious threat to achieving full employment,” he noted.
Supply under a magnifying glass
For the boss of the Fed, the way forward is however perilous, because it will be necessary to calibrate with precision the hike in key rates. And he admitted that Omicron could have a big impact. “Omicron really can, especially if China sticks to a no-COVID policy [avec des quarantaines strictes et massives], disrupting supply chains again, although it may be shorter this time, ”he said. “We are closely monitoring” the situation.