By Yasin Ebrahim

Investing.com – Federal Reserve Chairman Jerome Powell will stress that the U.S. central bank will continue to use its tools to support a strong labor market and prevent the risk of elevated for longer inflation, according to prepared remarks ahead of his testimony Tuesday for the Senate Banking Committee.  

Powell said in his prepared remarks that he would use all of his tools “to support the economy, a strong labor force and prevent high inflation becoming entrenched.”  “I want to thank President Biden that nominated me for a second term at the Board of Governors of Federal Reserve System.

The Fed chief will talk “sustained improvement” in the economy despite the ongoing pandemic, which has “given rise to persistent supply and demand imbalances and bottlenecks, and thus to elevated inflation.” 

“On the edge of the pandemic,” the U.S. Economy was in its 11th year, longest-ever expansion. [but]According to prepared testimony, this beautiful picture changed almost overnight when the virus spread across the globe.” 

These remarks were made just days before the U.S. inflation reports due Wednesday. They are expected to reveal that inflation rose at the fastest rate since 1982 in December.

Against the backdrop of elevated inflation, bets on the a more aggressive pace of rate hikes have continued to ratchet up, with Wall Street consensus now leaning toward four rate hikes this year, with the first hike as soon as March. 

“We are well aware that inflation is a serious problem, particularly for the less fortunate, who have to pay higher prices for essentials like food and housing. Our statutory goal of maximum employment is our top priority. We also want price stability. Powell will likely testify.