Federal Reserve Chair Jerome Powell continues to downplay concerns about spiking inflation.
House Republicans say they're worried about the U.S. economy under President Biden. Consumer prices jumped five percent in May year over year, the largest increase in thirteen years. Powell told lawmakers this week don't worry, the recent jump in consumer prices is only temporary. However, economist and national columnist Peter Morici says Republicans were right to push back. He believes there is a danger with the Fed's policy. Specific, Morici says Powell is enabling inflation by printing money to buy billions of government and mortgage-backed securities.
“There’s this thing in the liberal press, that the Fed can bring inflation under control if it had to. If it happened,” Powell said. “That’s simply not true. We learned from the 70’s that it is very difficult to put the genie back in the bottle.”
So how do we fix it?
“Powell should basically start to tail off the purchase of mortgage-backed securities, then treasuries,” Morici explained. “Then start to raise the federal funds rate. There is no reason for zero interest rates when the economy is growing this way.”
Morici says Powell is also wrong in backing the president's case for big deficits.