Powell vows to tackle inflation during two days of testimony before Congress
This week, Federal Reserve Chair Jerome Powell testified before the Senate Banking Committee on Wednesday and House Financial Services Committee on Thursday as part of the Fed’s Semiannual Monetary Policy Report to Congress. During both hearings, Powell vowed that the central bank would do what is necessary to tackle inflation; however, he stressed that what the Fed’s actions may mean for interest rates will depend on how economic data unfolds.
Ahead of the hearings, NAFCU Vice President of Legislative Affairs Brad Thaler wrote to both the Senate Banking Committee and the House Financial Services Committee to stress NAFCU’s thoughts on current issues and pledge to continue working with both Congress and the Fed to ensure credit unions’ concerns are heard.
In the letter, Thaler noted how government interference with debit interchange as part of the Dodd-Frank Act has harmed community financial institutions and explained any new caps or restrictions on interchange fees would hurt both consumers and credit unions. He reiterated NAFCU’s opposition to the Fed reopening the debit interchange regulation (Reg II) as merchants have requested.
During both hearings, lawmakers and Powell covered many topics, including how the Fed would manage potential trade-offs if the increase in interest rates slows the economy sharply without effectively reducing inflation. In response to this inquiry before the House Financial Services Committee, Powell noted that in such a scenario, the Fed “would be reluctant to shift from raising rates to cutting them until it saw clear evidence that inflation was coming down in a convincing fashion.”
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