In testimony to congress Federal Reserve Chair said he expects inflation to move downwards in later in 2022.
“Most forecasters, including at the Fed, continue to expect that inflation will move down significantly over the next year as supply and demand imbalances abate,” Powell told the Committee on Banking, Housing, and Urban Affairs of the US Senate. “It is difficult to predict the persistence and effects of supply constraints, but it now appears that factors pushing inflation upward will linger well into next year.”
The newly renominated Federal Reserve Chair noted that the emergence of the Omicron COVID-19 variant poses downside risks to employment and increased uncertainty for inflation, since it might reduce willingness to work in person, thereby aggravating supply chain disruptions.
“We understand that high inflation imposes significant burdens, especially on those less able to meet the higher costs of essentials like food, housing, and transportation,” added the Fed Chair. “We are committed to our price-stability goal. We will use our tools both to support the economy and a strong labor market and to prevent higher inflation from becoming entrenched.”
Inflation reached 6.2% year-over-year in October, adding to pressure for interest rate hikes from the Federal Reserve.