Sept. 28 (UPI) — Two top government financial officials will appear in Congress on Tuesday to give an update on the U.S. COVID-19 recovery, and note that inflation will likely affect the economy for longer than previously expected.
Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen will testify before the Senate banking committee, beginning at 10 a.m. EDT.
Powell will tell senators that although the economy is making positive gains, persistent supply chain issues have helped inflation rise and endure.
“Inflation is elevated and will likely remain so in coming months before moderating,” Powell says in his opening statement.
“As the economy continues to reopen and spending rebounds, we are seeing upward pressure on prices, particularly due to supply bottlenecks in some sectors.
“These effects have been larger and longer-lasting than anticipated, but they will abate, and as they do, inflation is expected to drop back toward our longer-run 2% goal.”
Powell’s Federal Reserve voted last week to leave key interest rates unchanged. The Fed hasn’t raised rates since the arrival of the coronavirus pandemic.
In her testimony, Yellen will say U.S. economic recovery has been “fragile but rapid” — and is being challenged some by the spread of the Delta coronavirus variant. The more contagious strain has directly led to increased restrictions nationwide that have economic consequences.
“While our economy continues to expand and recapture a substantial share of the jobs lost during 2020, significant challenges from the Delta variant continue to suppress the speed of the recovery and present substantial barriers to a vibrant economy,” Yellen says in her opening statement.
“I remain optimistic about the medium-term trajectory of our economy, and I expect we will return to full employment next year. A rebound like this was never a foregone conclusion. In fact, the American recovery is stronger than those of other wealthy nations.”
Stubborn inflation has become a talking point among Republicans like Senate GOP leader Mitch McConnell — and a focus among progressive Democrats who are working on a $3.5 trillion spending package in Congress.