WASHINGTON, D.C. — The head of the Federal Reserve faced questions from a Senate committee Tuesday about the state of the U.S. economy and the plan to tackle inflation.
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“My colleagues and I are acutely aware that high inflation is causing significant hardship,” said Federal Reserve Chairman Jerome Powell in his opening remarks. “The process of getting inflation back down to two percent has a long way to go and is likely to be bumpy.”
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The process to get there was under scrutiny during the hearing, with Powell facing criticism from both Republicans and Democrats.
Sen. Elizabeth Warren (D-MA) grilled Powell over the impact of the Fed raising interest rates.
Warren pointed to findings in Powell’s own report to Congress that shows two million people are expected to lose their jobs based on projected unemployment rates.
“If you could speak directly to the two million hardworking people who have decent jobs today who you’re planning to get fired over the next year. What would you say to them?” asked Warren.
“I would explain to people more broadly that inflation is extremely high and it’s hurting the working people of this country badly,” said Powell. “And we are taking the only measures we have to bring inflation down.”
Today, Chair Powell presents the semiannual Monetary Policy Report to the U.S. Senate Committee on Banking, Housing, and Urban Affairs via livestream: https://t.co/u36NeLK8Kahttps://t.co/pgnEGEOsSt— Federal Reserve (@federalreserve) March 7, 2023
Watch live: https://t.co/TL8c2ySyqe pic.twitter.com/KHUuandUNt
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Republicans, meanwhile, blamed the Biden administration’s economic policies for rising costs.
“Wouldn’t it be fair to assess that a lot of the policy, or the inflation that we’ve seen here, may very well be due to policy decisions by this administration?” asked Sen. Mike Rounds (R-SD).
“Senator, not for us to point fingers,” said Powell. “Our job is to use our tools. You asked whether we have the tools to get this job done, and we do.”
Democrats on the committee asked Powell about the impact of Congress not acting to raise the debt ceiling.
Right now, Congress is at odds over negotiations, with Republicans pushing for spending cuts before agreeing to raise the debt limit.
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“Chairman Powell, can you talk about the catastrophic damage a debt default would inflict on the economy?” asked Sen. Robert Menendez (D-NJ).
“These are really matters between the executive branch and Congress. We do not seek to play a role in these policy issues,” said Powell. “But at the end of the day, there’s only one solution to that… Congress really needs to raise the debt ceiling. That’s the only way out in a timely way that allows us to pay all our bills as due and if we fail to do so, I think that the consequences are hard to estimate but they could be extraordinarily adverse and can do longstanding harm.”
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