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June 22, 2021, 3:16 p.m. EDT

Fed’s Powell stays the course

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By Greg Robb

Federal Reserve Chairman Jerome Powell on Tuesday again signaled that the central bank would be patient before pulling back from its ultra-easy policy stance.

In testimony to the House select subcommittee on the coronavirus, Powell said the Fed had to be “very humble” about its ability to draw a signal out of the economic data given “such an unusual setting of reopening the economy.”

Many economists think the high inflation seen so far this year means the Fed should start to pull back its support for the economy.

Powell said the overshoot of inflation comes from categories like used cars and trucks that are directly affected by the reopening of the economy.

“Those are things that we would look to stop going up and ultimately start to decline,” he said.

However, the Fed chairman said that inflation could turn out to be more persistent than expected.

The Fed is prepared to use its tools if this turns out to be the case, he said.

Powell said he thought that businesses may find it easier to find workers as the year goes on.

There are temporary factors weighing on job creation, he said.

“I strongly suspect that labor supply and job creation will be moving up well over the rest of the year,” Powell said.

“I think we’ll see strong job creation in the fall.”

U.S. stocks were trading higher Tuesday, adding to the strong gains in the prior day’s session. The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.42% was up almost 100 points in late afternoon trading.

/zigman2/quotes/210598065/realtime
US : Dow Jones Global
34,935.47
-149.06 -0.42%
Volume: 281.14M
July 30, 2021 5:06p
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