Federal Reserve Chair Jerome Powell told U.S. Congress that he is 'inclined to propose and support a 25-basis-point rate hike' at the U.S. central bank's policy meeting this month
Powell called the Russian invasion of Ukraine "a game changer" that could have unpredictable consequences.
But the Fed chief said he was ready if needed to use larger or more frequent rate moves if inflation does not slow, and may over time need to push rates to restrictive levels above 2.5% - slowing economic growth rather than simply stimulating it less robustly. However inflation is currently triple the Fed's 2% target, and has become a prime political concern for the Biden administration and members of Congress who came to Wednesday’s hearing armed with anecdotes of constituents paying more for staple goods or for business supplies.
"The near-term effects on the U.S. economy of the invasion of Ukraine, the ongoing war, the sanctions, and of events to come, remain highly uncertain," Powell said. "Making appropriate monetary policy in this environment requires a recognition that the economy evolves in unexpected ways. We will need to be nimble in responding to incoming data and the evolving outlook."
Lawmakers peppered Powell with questions about the fallout from rising oil prices following Russia's action, the threat of cyberattacks and broader risks to the financial system, and even the impact on the market for fertilizer.
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