US Federal Reserve Chairman Jerome Powell on Wednesday said it was still too soon to scale back the central bank’s aggressive support for the US economy, while acknowledging that inflation has risen faster than expected.
“At our June meeting, the committee discussed the economy’s progress toward our goals since we adopted our asset purchase guidance last December,” Powell told the US House of Representatives Financial Services Committee. “While reaching the standard of ‘substantial further progress’ is still a ways off, participants expect that progress will continue.”
Throughout the three-hour virtual hearing, Powell was peppered with questions from Republican and Democratic US lawmakers on rising prices.
Critics say that inflation is being fanned by the Fed holding interest rates near zero while buying US$120 billion of Treasuries and mortgage-backed securities every month.
Powell said that while Fed officials expect high inflation to be temporary, they would react if inflation turned out to be persistently and materially above the central bank’s 2 percent target.
“There’s nothing in the guidance or our framework that would prevent us from doing the right thing at the right time,” he said.
Powell was to face more questions from the US Senate banking panel yesterday.
Powell “is trying to push back on this idea on that they are under pressure to exit or that they have decided to taper soon,” said Priya Misra, head of global rates strategy at TD Securities in New York. “He said the labor market has a long way to go.”
Republican lawmakers asked Powell to explain how monetary policy could ease supply bottlenecks blamed for rising prices, or if the Fed’s bond buying was distorting financial markets.
Powell said that he would be watching to see if labor supply increases as enhanced unemployment benefits expire in coming months, adding that he was willing to look through the current shortages, and effects on wages and prices if necessary.
“Even after this supply comes, it is still likely that we will still be short of maximum employment,” Powell said. “That is why we don’t see that is time to raise interest rates now.”
Ten-year Treasuries yields edged lower to about 1.35 percent as Powell testified and US stocks closed near all-time highs.
US government data released on Tuesday showed that prices paid by US consumers last month surged by the most since 2008, increasing 5.4 percent from the same month last year.
“Strong demand in sectors where production bottlenecks or other supply constraints have limited production has led to especially rapid price increases for some goods and services, which should partially reverse as the effects of the bottlenecks unwind,” Powell said on Wednesday.
He also noted that asset prices and risk appetite have risen, while downplaying any near-term risks to the economy from financial markets.
Powell’s remarks before the US Congress this week are his last semi-annual testimonies before US President Joe Biden decides whether to give him another four years at the Fed helm or pick someone else.
Powell’s tenure as chairman expires in February next year.
INFRINGEMENT: The investigation comes after a complaint from Vicor Corp, with the company seeking a limited exclusion order as well as cease-and-desist orders, the ITA said The US International Trade Commission (USITC) has launched a Section 337 investigation naming Taiwanese technology companies, including Hon Hai Precision Industry Co (鴻海), Delta Electronics Inc (台達電) and Quanta Computer Inc (廣達), as respondents. The Ministry of Economic Affairs (MOEA) pledged assistance if needed. The USITC said on Friday in a statement that it had voted to institute an investigation under Section 337 of the US Tariff Act of 1930 into certain vertical power delivery systems, related components and computing devices incorporating such systems. The investigation covers 20 companies from Taiwan, China, Germany and the US, the commission said, adding that it
INDUSTRY STANDARD: Most global semiconductor companies have tied employee bonuses directly to corporate profits, the union said, urging Micron to do the same Micron Memory Taiwan Co’s (台灣美光) Taoyuan union secured strike authorization yesterday after a six-day vote, ramping up pressure on management to build a reasonable profit-sharing mechanism. Before the strike, the Taoyuan union “encourages” members to join a protest in Taipei on Oct. 19, union chairman Jerry Lin (林哲瑞) told a news conference in Taipei. The union did not rule out staging a snap strike, Lin said. The union has 2,258 registered members, with 88.3 percent backing the strike, he said. The vote comes as Micron’s board of directors is meeting today and tomorrow in the US. The union expects the board to respond
Elon Musk said his business empire would build and operate Terafab independently, quashing speculation about industry leader Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) swooping in to run his ambitious chipmaking venture. Based in Texas, the Terafab project is Musk’s effort to break into the business of fabricating chips, in service of his companies Tesla Inc and SpaceXAI. While Musk had said that he was in discussions with TSMC, the trillionaire clarified in an X post yesterday that the only matter under consideration is for TSMC potentially leasing some part of the planned site and would not involve any operational role. “Maybe TSMC
PACKAGING PUSH: The chipmaker said that it would begin ramping up silicon interposer production in New York in the first half of 2028 to support AI systems GlobalFoundries Inc shares gained as much as 7 percent after the chip manufacturer announced a five-year, US$2 billion deal to provide US production capacity to Taiwan Semiconductor Manufacturing Co (TSMC, 台積電). Under the agreement, announced on Thursday, GlobalFoundries is to help supply components known as silicon interposers. The US company is to rely on manufacturing at its facility in Malta, New York, and said it has the option to expand capacity “as customer demand grows.” An interposer is a small layer of silicon that sits between a chip and its packaging. It is home to the wires that carry electronic signals and
RSS