On the second day of his presentation on the semi-annual Monetary Policy Report, Powell spoke at the session of the Banking, Housing and Urban Affairs Committee of the US Senate. So far, commodity prices, especially energy prices, have risen significantly, Powell said.
Pointing out that this situation will suppress inflation upwards, Powell said that risk appetite may also decrease and this may cause a decrease in investments and expenditures.
Reiterating that the effects of the Ukraine war on the US economy are uncertain, Powell emphasized that they are watching the situation carefully.
Stating that the war has not affected the bank’s plans so far, Powell said, “I think it would be appropriate for us to continue on the line we had in mind before the invasion of Ukraine took place. This is to raise interest rates at the March meeting and continue throughout the year.” said.
Noting that there is a lot of uncertainty on both the supply and demand sides, Powell stated that the “strong financial” conditions of households and businesses can help sustain expenditures.
Powell stated that extremely low interest rates are not acceptable at the moment, adding that it is too early to say whether the Russia-Ukraine war will affect the Fed’s decision on the interest rate.