jerome h powell : semi - annual monetary policy report to the congress speech by mr jerome h powell, chair of the board of governors of the federal reserve system, before the committee on financial services, u. s. house of representatives, washington dc, 14 july 2021. * * * chairwoman waters, ranking member mchenry, and other members of the committee, i am pleased to present the federal reserve ’ s semiannual monetary policy report. at the federal reserve, we are strongly committed to achieving the monetary policy goals that congress has given us : maximum employment and price stability. we pursue these goals based solely on data and objective analysis, and we are committed to doing so in a clear and transparent manner. today i will review the current economic situation before turning to monetary policy. current economic situation and outlook over the first half of 2021, ongoing vaccinations have led to a reopening of the economy and strong economic growth, supported by accommodative monetary and fiscal policy. real gross domestic product this year appears to be on track to post its fastest rate of increase in decades. household spending is rising at an especially rapid pace, boosted by strong fiscal support, accommodative financial conditions, and the reopening of the economy. housing demand remains very strong, and overall business investment is increasing at a solid pace. as described in the monetary policy report, supply constraints have been restraining activity in some industries, most notably in the motor vehicle industry, where the worldwide shortage of semiconductors has sharply curtailed production so far this year. conditions in the labor market have continued to improve, but there is still a long way to go. labor demand appears to be very strong ; job openings are at a record high, hiring is robust, and many workers are leaving their current jobs to search for better ones. indeed, employers added 1. 7 million workers from april through june. however, the unemployment rate remained elevated in june at 5. 9 percent, and this figure understates the shortfall in employment, particularly as participation in the labor market has not moved up from the low rates that have prevailed for most of the past year. job gains should be strong in coming months as public health conditions continue to improve and as some of the other pandemic - related factors currently weighing them down diminish. as discussed in the monetary policy report, the pandemic - induced declines in employment last year were largest for workers with lower wages and for african

of this goal, in march of this year, the agencies published a request for information on financial institutions ’ use of artificial intelligence. as part of this request for information, the agencies sought details about banks ’ challenges in developing, adopting, and using this technology, including those challenges related to third - party services. while we are still reviewing and processing the feedback, initial reactions from federal reserve staff indicate that these responses are very helpful in our consideration of next steps. so, i would like to thank those who provided comments in response to the agencies ’ request, especially those pertaining to the use of artificial intelligence by community banks. comment letters confirmed our understanding that at times community banks choose to engage with fintech partners and their models to tap into the benefits of ai. we have also heard loud and clear that acting on an interagency basis to ensure regulatory consistency is very important. as we consider the information collected and the potential next steps, i will encourage federal reserve staff to continue exploring opportunities to provide supervisory clarity on this topic and more 3 / 4 bis central bankers'speeches generally to consider ways to help community banks innovate in the application of new technologies. conclusion in conclusion, i welcome comments and feedback not only on the resources the federal reserve and other agencies have published recently but also regarding additional resources that may be helpful for community banks as they continue to pursue access to innovation. and in the coming weeks, i look forward to participating in two upcoming innovation - focused programs oriented toward community banks. the federal reserve will host an “ ask the fed ” program later this fall focused on community banks and service providers, and the board and the kansas city reserve bank will jointly host an innovation office hours event later this month. frequent and continued engagement with bankers, fintechs, and other third parties has demonstrated the nuance, complexity, and many considerations involved in promoting community bank access to innovation. it is my sincere intention that the community bank / fintech partnership paper, the vendor due diligence guide, and proposed third - party, risk - management guidance serve as a foundation upon which the federal reserve will continue to build. 1 conference of state bank supervisors, 2020 csbs national survey of community banks ( pdf ), 2020 research and policy conference. return to text 4 / 4 bis central bankers'speeches