statement by jerome h. powell chair board of governors of the federal reserve system before the select subcommittee on the coronavirus crisis u. s. house of representatives june 22, 2021 chairman clyburn, ranking member scalise, and other members of the select subcommittee, thank you for the opportunity to update you on our ongoing measures to address the hardship wrought by the pandemic. since we last met, the economy has shown sustained improvement. widespread vaccinations have joined unprecedented monetary and fiscal policy actions in providing strong support to the recovery. indicators of economic activity and employment have continued to strengthen, and real gdp this year appears to be on track to post its fastest rate of increase in decades. much of this rapid growth reflects the continued bounce back in activity from depressed levels. the sectors most adversely affected by the pandemic remain weak, but have shown improvement. household spending is rising at a rapid pace, boosted by the ongoing reopening of the economy, fiscal support, and accommodative financial conditions. the housing sector is strong, and business investment is increasing at a solid pace. in some industries, nearterm supply constraints are restraining activity. as with overall economic activity, conditions in the labor market have continued to improve, although the pace has been uneven. the unemployment rate remained elevated in may at 5. 8 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 pick up in coming months as vaccinations rise, easing some of the pandemic - related factors currently weighing them down. the economic downturn has not fallen equally on all americans, and those least able to shoulder the burden have been the hardest hit. in particular, despite progress, joblessness continues to fall disproportionately on lower - wage workers in the service sector and on african americans and hispanics. the fed pursues monetary policy aimed at fostering a strong, stable economy that can improve economic outcomes for all americans. those who have historically been left behind stand the best chance of prospering in a strong economy with plentiful job opportunities. and our economy will be stronger and perform better when everyone can contribute to, and share in, the benefits of prosperity. inflation has increased notably in recent months. this reflects, in part, the very low readings from early in the pandemic falling

as president i am the warrantor that the governing council is up to its treaty mandate : price stability. what can the ecb do to have a better control of the money supply? the monetary pillar in our strategy is important. as you know we cross check results of the economic analysis and of the monetary analysis. we have ample liquidity in the euro area. as an example, the rate of growth of the outstanding loans to the non - financial corporations was 12. 9 percent over the last 12 months. this shows that credit is presently abundant in europe. what do you think of the so called housing bubble? do you think there is one in europe and if so what are the dangers for the european economy? we have to look very carefully at the euro area as a whole. there is evidently no such bubble in germany, whereas in a number of other countries there is an accumulation of price increases of the last years, suggesting that close and careful monitoring is warranted. i don ’ t have a diagnosis of a bubble in the euro area as a whole, but what we see in some parts of the euro area calls for very close attention. so we have to be alert. are you concerned that by raising the interest rates you might stop the main source of growth, as many see it, which is housing? by raising interest rates, as we did last week, we are contributing decisively to the sustainability of growth. if we don ’ t ensure price stability then growth will not be sustainable. that has to be clearly understood. we are not hampering growth! not at all. on the contrary, we are permitting growth to be sustainable in the medium and long run. the mandate to ensure price stability over time – which has been given to us by the treaty – is there because it is a condition for sustainable growth and job creation. are you concerned that a number of households which have accumulated big debts in the past will face serious problems paying them back in the future because of the interest rate hikes that you have decided during the last year? i would ask those households which feel that interest rates are too high at the moment to compare with the interest rates they had in the same economies before the introduction of the euro! but households tend to forget what happened before the euro. and some of them have accumulated big debts during the last two to three years and now they may be facing difficulties in servicing them. do you have a golden rule to suggest to the households, so that they