Federal Reserve Chair Jerome Powell will highlight the central bank’s efforts to fight inflation and stabilize the US economy at his confirmation hearing, according to testimony released Monday.
However, the Republican will likely also face questions about his ethics from a Democratic senator, after a media report raised further questions over whether a Fed official had traded securities to benefit from the upheaval caused by the Covid-19 pandemic in 2020.
Powell’s testimony Tuesday before the Senate Banking Committee comes after President Joe Biden nominated him for a second term leading the central bank as the US economy deals with a wave of record-high inflation that’s prompted critics to accuse the Fed of complacency.
“We know that high inflation exacts a toll, particularly for those less able to meet the higher costs of essentials like food, housing, and transportation,” Powell will tell senators, according to the testimony.
“We are strongly committed to achieving our statutory goals of maximum employment and price stability. We will use our tools to support the economy and a strong labor market and to prevent higher inflation from becoming entrenched.”
However, the Fed chair is facing scrutiny after new details reported by The New York Times last week of Vice Chair Richard Clarida’s activity in the stock market in February 2020, just weeks before it plunged as the Covid-19 pandemic began.
The central bank intervened aggressively to stop a wider liquidity crisis and indices eclipsed their pre-pandemic level in the months that followed.
In a letter sent Monday, Democratic Senator Elizabeth Warren, citing the Times’ reporting, asked “that the Federal Reserve… release all available information about the trades by Fed officials” by next Monday.
The Fed in October announced stricter investment rules after a controversy over the trading activities of Powell and two other senior officials, who ended up resigning.
Clarida on Monday announced he would leave the central bank’s Board of Governors on January 14.