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Federal Reserve Chairman Jerome Powell provided testimony before the House Financial Services Committee on Wednesday, during a hearing titled “Monetary Policy and the State of the Economy,” where he presented and discussed the Fed’s semiannual Monetary Policy Report. Of note, Powell stated he supports a 25-basis point increase in interest rates, and also called for action on crypto given recent headlines about it being used to get around U.S. imposed sanctions against Russia.

Before Powell addressed the report, he directed attention toward the prominent Russian-Ukrainian tensions and its impact on the economy.

“The conflict is causing tremendous hardship for the Ukrainian people,” stated Powell. “The implications for the U.S. economy are highly uncertain, and we will be monitoring the situation closely.”

During his testimony, Powell described the current economic situation in the country expanding “at a robust 5 and a half percent pace last year” due to progress on vaccinations, the reopening of the economy, fiscal policy support, and more. In addition, Powell described the labor market to be “extremely tight” with employment rising by 6.7 million in 2021. 

Powell also made note of the increased inflation running well above the Fed’s objective of 2 percent, and addressed concerns regarding the topic.

“We understand that high inflation imposes significant hardship, especially on those least able to meet the higher costs of essentials like food, housing, and transportation,” addressed Powell. “We know that the best thing we can do to support a strong labor market is to promote a long expansion, and that is only possible in an environment of price stability.”

Most questions directed at Powell were in regards to inflation, to which Powell reiterated that the inflation hike is likely due to supply chain issues, low interest rates, and increased demand. When asked about stablecoins, Powell stated that he pictures regulated stablecoins having a future role in the economy.

Powell concluded his remarked by addressing that the effects on the U.S. economy with the Ukraine invasion, ongoing war, sanctions, and more to come remain highly uncertain and therefore creates difficulty in making appropriate monetary policy at this time. However, he made clear that the Fed “will do everything [they] can to achieve maximum-employment and price-stability goals.”

Watch the full hearing and read Powell’s full testimony. NAFCU will continue to monitor the Fed’s future monetary policy efforts as the year progresses.