WASHINGTON: US Federal Reserve Chair Jerome Powell has stated that if inflation remains high, the central bank would have to raise interest rates much further.
"If we see inflation persisting at high levels longer than expected... if we have to raise interest rates more over time, we will," Powell said at his Senate Banking Committee confirmation hearing on Tuesday, noting that US inflation is "very far above" the central bank's target of 2 percent, according to reports.
"The economy no longer requires or desires the extremely accommodative policies we implemented in response to the Covid-19 outbreak and its aftermath," he stated. "We're going to be moving to a more normal policy over the course of this year. However, from where we are now, it will be a lengthy path back to normalcy "Added the Fed Chairman.
According to the US Labor Department, the consumer price index climbed 6.8 percent in the 12-month period ending in November, the fastest annual rate in over 40 years.
"We know that high inflation has a cost, especially for those who are less able to afford the increasing costs of necessities like food, housing, and transportation," Powell said, adding that the central bank will utilise its instruments to prevent higher inflation from becoming entrenched.
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