The Federal Reserve is poised to act to ensure rising inflation doesn’t become entrenched, Chairman Jay Powell will reiterate to U.S. lawmakers at Tuesday’s confirmation hearing.

In testimony to the Senate Banking Committee, Powell was nominate President Joe Biden, in his second term as the U.S. central bank in November — will praise the speed of the economic recovery, the strength of the labor market and the costs of high inflation.

“Despite the persistence of the pandemic, the economy has strengthened rapidly, leading to persistent supply-demand imbalances and bottlenecks that have led to higher inflation,” he said in prepared remarks.

“We know that higher inflation takes its toll . . . we will use our tools to support the economy and a strong labor market and prevent higher inflation from becoming entrenched,” he added.

Powell will testify ahead of the latest inflation report, which is expected on Wednesday to show consumer prices rising at an annual rate of 7%, the fastest pace in 40 years.

Powell stressed the importance of flexibility in the Fed’s approach, arguing that monetary policy must take a “broad and forward-looking view, keeping pace with an evolving economy.”

When Biden announced Powell’s re-nomination in November, he made clear that curbing inflation was his administration’s top priority. He added that he believes Powell and his appointee, central bank governor Lael Brainard, are best placed to steer the U.S. economy toward a stronger recovery.

“I believe Jay is the right person to lead us through this job while addressing the threat [that] inflation. . . to impose [on] Our family and our economy,” Biden said at the time.

In the weeks following the nomination decision, the Fed abruptly took Policy pivot, ditching the characterization of inflation as “transitory” in favor of a more aggressive approach to ensuring U.S. consumer price increases don’t become entrenched.

Not only has the Fed accelerated the pace of ending stimulus, but prepared Financial markets are concerned about the prospect of three rate hikes this year and a move to shrink the size of its massive balance sheet sometime in 2022.

Economists today expected The Fed will begin “lifting off” in March and begin reducing its portfolio shortly thereafter — a sequence that many senior officials have publicly supported since then.

Goldman Sachs expects further rate hikes in June, September and December, following the March move. It expects the Fed to stop reinvesting the proceeds of its maturing securities in July.

Minutes of the December Policy Meeting transmit signal A similar timetable, records indicate that policymakers see rate hikes as “faster or faster,” as that may be justified given how quickly the economy rebounds.

Friday’s new jobs data showed the unemployment rate linear decrease While monthly job growth slowed sharply in December, it remained below 4%, further strengthening bets on a rate hike in March.

Wage growth has also risen sharply as a record number of Americans quit their jobs.economist Say The economy is near (if not already at) maximum employment, the second target set by the Fed to gauge the opportune moment to pull its main policy rate away from zero.

Fed officials said the first target, where inflation averages 2% over time, has “beyond the target.”

While jobs are still down 3.6 million compared to before the pandemic, Powell has previously defended the Fed’s hawkish turn, arguing that stable prices are critical to a long-term stable economic recovery.

In selecting Powell, a Republican who was first appointed to the position by former President Donald Trump in 2017, Biden rejected the party’s progressive criticism of the chairman’s oversight record – which they say has led to a post-global Dilution of policy. Financial Crisis Rules Guiding America’s Largest Banking Institutions. They also questioned Powell’s stance on issues related to climate change and called for a leader who can take a more proactive approach to thinking about the associated financial risks.

Powell could also face questions about a deal scandal that broke out under his watch, rekindle Last week, new disclosures from Vice-Chair Richard Clarida suggested he was more active in financial markets than he initially revealed.

Clarida’s four-year term expires at the end of the month, Announce On Monday, he will resign from his post this week.

Fed in October Announce The rules have significantly restricted senior staff trading, but the latest deals were made around highly sensitive policy decisions early in the pandemic, again damaging the central bank’s credibility.

Clarida, who will be replaced by Brainard, will face a confirmation hearing by the Senate Banking Committee on Thursday.