Powell tells Senate Fed remains focused on dual mandate as inflation eases
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Summary
Federal Reserve Chair Jerome H. Powell told the Senate Banking Committee the Fed is focused on achieving maximum employment and stable prices, saying inflation has moved closer to the 2% goal and the committee will be deliberate about future policy changes.
Federal Reserve Chair Jerome H. Powell told the Senate Banking, Housing, and Urban Affairs Committee that the Fed remains focused on its dual mandate of maximum employment and stable prices and that recent data show progress toward those goals.
Powell said the economy "is strong overall and has made significant progress toward our goals over the past 2 years," noting that "inflation has moved much closer to our 2% longer run goal though it remains somewhat elevated." He described labor market cooling from an overheated state while remaining solid.
The Fed chair reviewed recent indicators: gross domestic product growth, a moderation in payroll gains and unemployment around 4% in January, and 12‑month personal consumption expenditures inflation of 2.6% (2.8% core PCE excluding food and energy). He told senators the FOMC reduced the policy rate by a full percentage point since last September and has continued reducing security holdings.
Powell said policymakers must balance risks on both sides of the mandate: "If the economy remains strong and inflation does not continue to move sustainably toward 2%, we can maintain policy restraint for longer. If the labor market were to weaken unexpectedly or inflation were to fall more quickly than anticipated, we can ease policy accordingly." He also said the Fed will conclude a periodic review of its strategy and communications by late summer.
Committee members asked about the timing of future rate cuts, long‑term interest rates and mortgage costs, and the Fed's role in a range of structural issues from housing supply to payments infrastructure. Powell reiterated that short‑term policy is set by the FOMC and that long rates and mortgage rates are influenced by broader market factors.
Powell closed by emphasizing the Fed's accountability to Congress and its public mission: "We remain committed to supporting maximum employment, bringing inflation sustainably to our 2% goal, and keeping longer term inflation expectations well anchored."