US lawmakers on Thursday warned the Federal Reserve of the recession and urged the central bank to focus on price stability during testimony by Fed Chair Jerome Powell before the House of Representatives Committee on Financial Services.
Committee chairwoman Maxine Waters said the price of housing, gasoline and groceries had skyrocketed.
“While it is important for the Fed to fight inflation, I warn against any means that will ignore the Fed’s peak employment mandate and lead to an economic downturn in which millions of people lose their homes and jobs,” he said.
The Democratic Congresswoman from the state of California noted that low-income workers have turned to cryptocurrencies to generate wealth but urged the Fed to work with regulators to oversee the crypto market.
Kentucky state Republican Congressman Andy Barr says he hopes the Fed rises to the occasion to fight inflation.
“Specifically, the Fed should be laser-focused on its price stability mandate, and even if you accept the risk of a recession, and everyone wants a soft-landing, I encourage the Fed to prioritize defeating this inflationary scourge.” He said.
Patrick Timothy McHenry of North Carolina said the 40-year high inflation rate is hurting Americans with rising prices of gasoline, food, airfare, cars, medical care and clothing.
“How the Fed handles the next few months is as crucial as any other period in the last four decades,” said the Republican congressman. “The Fed should focus on price stability. That should be their single-minded focus at the moment.”
McHenry criticized President Joe Biden’s nearly $ 2 trillion American rescue plan, which was signed into law in March 2021, and suggested a stimulus bill as the main cause of inflation.
Powell said higher prices are likely to occur in areas where supply is constrained and demand is strong. “During the epidemic, demand for cars increased when people wanted to drive cars rather than public transport,” he said.
“Our job is to maintain maximum employment and price stability,” he said. “Our commitment to fight inflation is unconditional. If (interest) rates are high, then the demand for cars will be moderate, a little lower.” He said the war in Ukraine was driving up fuel prices and increasing gasoline prices in the US.
New York Democrat Gregory Meeks asked Powell if he could fix inflation without increasing unemployment.
Powell said unemployment is at an all-time high but it is at historically low levels.
Senator Elizabeth Warren, a Democrat from Massachusetts, warned the Fed on Wednesday that aggressive rate hikes could cause the American economy to recession.
Although Powell told the Senate committee that the US economy was strong enough to handle the rate hike, he noted that the recession was “definitely a possibility.”
The Anadolu Agency website AA News Broadcasting System (HAS) contains only a portion of news provided to subscribers and is in summary form. Please contact us for subscription options.