During his Tuesday confirmation hearing, Federal Reserve Chair Jerome Powell attempted to explain why the central bank failed to anticipate the historic levels of inflation plaguing the country, CNN reports.
Powell, who is expected to win a second term leading the Fed following a renomination from President Biden, said protracted supply chain issues and workers' slower-than-expected return to the job market are to blame for the Fed's nearsighted inflation call, CNN notes.
"We and other forecasters, we believed based on our analysis and discussions with people in industry that the supply side issues would be alleviated more quickly than now appears to be the case," Powell said Tuesday. "Substantially more quickly."
And though a diminished labor supply is not to blame for this current bout of inflation, it could "be an issue going forward for inflation, probably more than the supply side issues," he noted.
Overall, however, Powell remains hopeful supply chain bottlenecks will ease this year, and stated the central bank will work "to prevent higher inflation from becoming entrenched." He also said that if "we have to raise interest rates more over time, we will. We will use our tools to get inflation back."
The Fed chief told lawmakers that the economy is healthy enough and no longer requires aggressive stimulus, but "it would take time for the central bank to return interest rates to levels that prevailed before the pandemic," the Journal writes.
"It is really time for us to move away from those emergency pandemic settings to a more normal level," said Powell. "It's a long road to normal from where we are." He added that the Fed is "strongly committed" to achieving maximum employment and price stability.