Falling prices are a clear signal of a Fed | Business and Economic Affairs

Fed Chief Executive Jerome Powell is due to complain about rising prices for his Senate affidavit case.

Federal Reserve chairman Jerome Powell faces the challenge of rising prices in his Senate case Tuesday for the second time as the highest-ranking banks in the United States.

In a preliminary statement issued before the trial, Powell acknowledged how rising inflation is pushing U.S. families, especially low-income earners, who see a significant portion of their income being undermined by rising inflation.

“We know that rising inflation poses a risk, especially for those who cannot afford basic necessities such as food, housing and transportation,” he said.

President Joe Biden in November wrote Powell to run a second four-year term in the Fed leadership. In his first stint, Powell oversaw the economy through the worst recession in the first months of the epidemic in 2020, and has led to recovery since then.

Throughout the recovery period, the Fed has been lending very low rates, citing inflation as “temporary” because it prioritizes millions of Americans who have lost their jobs to return to work.

But in December, inflation has been on the rise for nearly 40 years and the labor market has the largest number of jobs available, Powell said. omitted the word “transitory” in evidence before Congress. Later that same month, at the end of the Federal Fiscal Statement of 2021, the central bank changed its approach to inflation, indicating that a three-fold increase in interest rates could be on the cards this year.

Since then, the minutes of the December Fed decision-making meeting released last week raised interest in the recent rise in inflation in March.

And some economists want to take a more aggressive approach to the Fed. In letters to customers Sunday, Goldman Sachs analysts led by Jan Hatzius said they now see a four-fold increase in interest rates this year.

“We continue to see the movement in March, June, and September, and we have now increased the December climb to four in 2022,” he wrote.