Fed Chairman: Inflation Could Be Worse Than Expected, Generous Unemployment Benefits Kept People From Working
US President Joe Biden speaks about American manufacturing and the American workforce after touring the Mack Trucks Lehigh Valley Operations Manufacturing Facility in Macungie, Pennsylvania on July 28, 2021.
Saul Leonard/AFP via Getty Images

Jerome Powell, chairman of the Federal Reserve, said during a press conference on Wednesday that inflation could be worse than what was originally expected and that the “generous unemployment benefits” contributed to people not working.

The Hill reported:

Powell spoke to reporters shortly after the Fed’s Federal Open Market Committee (FOMC) announced it would keep interest rates at a 0 to 0.25 percent baseline range and continue its monthly purchases of at least $80 billion in Treasury bonds and $40 billion in mortgage-backed securities, as widely expected. The FOMC did, however, note that “the economy has made progress” toward the Fed’s goals of maximum employment and inflation on track to be slightly higher than 2 percent annually.

While the U.S. remains more than 6.8 million jobs below its February 2020 peak, inflation has risen to an annual rate of more than 5 percent — well above the Fed’s target — largely due to supply disruptions and kinks related to the reopening of the economy.

“As the reopening continues, bottlenecks, hiring difficulties, and other constraints could continue to limit how quickly supply can adjust, raising the possibility that inflation could turn out to be higher and more persistent than we expected,” Powell said. “Our new framework for monetary policy emphasizes the importance of having well-anchored inflation expectations, both to foster price stability and to enhance our ability to promote our broad-based and inclusive maximum employment goal.”

Powell also reportedly noted that “generous unemployment benefits” were among the factors that kept Americans from going back to work.

The news comes as President Joe Biden faces mounting challenges to continue to advance his agenda as only “45% [of Americans] judge the economy to be in good shape, while 54% say it’s in poor shape,” The Associated Press reported. A Politico/Morning Consult poll found that 59% of registered voters blame the Biden administration for skyrocketing inflation.

Other highlights from Powell’s press conference include:

This is a developing story; refresh the page for updates.

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