Fed’s Powell: Inflation poses a major threat to job market

“High inflation is a severe threat to the achievement of maximum employment,” he said.

The economy, the Fed chair added, must grow for an extended period to put as many Americans back to work as possible. Controlling inflation — without raising rates so high as to choke off the economic recovery — is critical to lowering unemployment, Powell said.

“We know that high inflation exacts a toll, particularly for those less able to meet the higher costs of essentials like food, housing, and transportation,” he told the committee.

Before the Fed chair spoke, he received expressions of bipartisan support from the chair of the committee, Democratic Sen. Sherrod Brown from Ohio, and Pennsylvania Sen. Pat Toomey, the senior Republican on the panel.

“The president is putting results over partisanship, re-nominating a Federal Reserve chair of the other political party,” Brown said. “As chair, together with President Biden, he has helped us deliver historic economic progress.”

“There is broad bipartisan backing for Chairman Powell’s re-nomination,” Toomey added.

Inflation has soared to the highest levels in four decades, and on Wednesday the government is expected to report that consumer prices jumped 7.1% over the past 12 months, up from November’s 6.8% year-over-year increase.