Jerome H Powell: Testimony at nomination hearing
Testimony by Mr Jerome H Powell, Chair of the Board of Governors of the Federal Reserve
System, before the US Senate Committee on Banking, Housing, and Urban Affairs, Washington
DC, 11 January 2022.
* * *
Chairman Brown, Ranking Member Toomey, and other members of the Committee, thank you
for the opportunity to appear before you today. I would like to thank President Biden for
nominating me to serve a second term as Chair of the Board of Governors of the Federal
Reserve System. I would also like to thank my colleagues throughout the Federal Reserve
System for their dedication, perseverance, and tireless work on behalf of the American people.
Their commitment and expertise were essential to the Fed's response to the COVID-19 crisis
and remain vital to the implementation of monetary policy as our economy continues to progress.
Particular thanks go to my wife, Elissa Leonard, and our three children, Susie, Lucy, and Sam.
Their love and support make possible everything I do. My five siblings are all watching, and we
are thinking of each other and of our parents today with love and gratitude.
Four years ago, when I sat before this Committee, few could have predicted the great challenges
that would soon become ours to meet.
On the eve of the pandemic, the U.S. economy was enjoying its 11th year of expansion, the
longest on record. Unemployment was at 50-year lows, and the economic benefits were
reaching those most on the margins. No obvious financial or economic imbalances threatened
the ongoing expansion. But this attractive picture turned virtually overnight as the virus swept
across the globe.
The initial contraction was the fastest and deepest on record, but the pain could have been much
worse. As the pandemic arrived, our immediate challenge was to stave off a full-scale
depression, which would require swift and strong policy actions from across government.
Congress provided by far the fastest and largest response to any postwar economic downturn.
At the Federal Reserve, we used the full range of policy tools at our disposal. We moved quickly
to restore vital flows of credit to households, communities, and businesses and to stabilize the
financial system.
These collective policy actions, the development and availability of vaccines, and American
resilience worked in concert, first to cushion the pandemic's economic blows and then to spark a
historically strong recovery.
Today the economy is expanding at its fastest pace in many years, and the labor market is
strong.
As always, challenges remain. Both the initial shutdown and the subsequent reopening of the
economy were without precedent. The economy has rapidly gained strength despite the ongoing
pandemic, giving rise to persistent supply and demand imbalances and bottlenecks, and thus to
elevated inflation. 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. 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.
We can begin to see that the post-pandemic economy is likely to be different in some respects.
The pursuit of our goals will need to take these differences into account. To that end, monetary
policy must take a broad and forward-looking view, keeping pace with an ever-evolving economy.
Over the past four years, my colleagues and I have continued the work of our predecessors to
ensure a strong and resilient financial system. We increased capital and liquidity requirements
for the largest banks-and currently, capital and liquidity levels at our largest, most systemically
important banks are at multidecade highs. We worked to improve the public's access to instant
payments, intensified our focus and supervisory efforts on evolving threats such as climate
change and cyberattacks, and expanded our analysis and monitoring of financial stability. We will
remain vigilant about new and emerging threats.
We also updated our monetary policy framework, drawing on insights from people and
communities across the country, to reflect the challenges of conducting policy in an era of
persistently low interest rates.
Congress has assigned the Federal Reserve important goals and has given us considerable
independence in using our tools to achieve them. In our democratic system, that independence
comes with the responsibility of transparency and clear communication, to keep the public
informed and enable effective legislative oversight. That duty takes on even greater significance
when the Fed must take extraordinary actions in times of crisis. In order to facilitate that
transparency, and to earn your trust and that of the American people, I have made it a priority to
meet regularly and frequently with you and your elected colleagues. I commit to continuing that
practice if I am confirmed to another term.
The Federal Reserve works for all Americans. We know our decisions matter to every person,
family, business, and community across the country. I am committed to making those decisions
with objectivity, integrity, and impartiality, based on the best available evidence, and in the
longstanding tradition of monetary policy independence. That pledge lies at the heart of the Fed's
mission and is one we all make when we answer the call to public service. I make it here again,
with force and without reservation.
Everything we do at the Federal Reserve is in pursuit of the goals set for us by Congress. I am
honored to have worked in service to those ends since I joined the Fed in 2012, and as Chair for
the past four years.
Thank you. I look forward to your questions.