WASHINGTON, D.C. — Both U.S. senators from Ohio questioned Jerome Powell, chair of the Federal Reserve, on Tuesday as inflation continues to affect Americans.
Sen. Sherrod Brown (D) said he is concerned that continued increases in interest rates will hurt workers without addressing the root cause of inflation, especially when job growth is strong and unemployment remains historically low.
“Every indication is that this post-pandemic is different,” said Brown. “Should we be worried, Mr. Chair, that the Fed is treating this economic period as it has in the past, instead of reacting differently?”
Powell said there are many factors at play.
“So, we’re well aware that this particular situation involves a mix of forces, not all of which our tools can affect,” said Powell. “But there is a job for us to do in better aligning demand with supply.”
Powell said what’s unique about this moment is the supply side issues experienced at the start of the pandemic, along with the impact on commodity prices during the start of Russia’s war on Ukraine, have leveled out. He said the focus right now should be on the mismatch between supply and demand.
Freshman Sen. JD Vance (R) had his first opportunity to question Powell.
Vance focused on an economic populist message. He asked whether the U.S. being the world’s reserve currency has more downsides than upsides.
Vance said he’s worried the lack of control the U.S. has over its currency is driving lack of production on U.S. soil, thus affecting inflation.
“When I look at the American economy, we have a lot of financial engineers and we have a lot of diversity consultants,” said Vance. “We don’t have a lot of people making things. And I worry that the reserve currency status, and that the lack of control we have over our currency, is perhaps driving that. I’d love to get your feedback on that.”
Powell said the domestic market affects inflation more than the global market.
“Of course we benefit by being able to pay for our goods all over the world—pay for everything anywhere in the world, mostly, with dollars. That’s an advantage… It doesn’t make it harder for us to keep inflation under control,” Powell said. “The United States has a smaller external sector than most larger economies. It’s only about 15%. So mainly what affects inflation in the United States is domestic supply and demand, mainly.”
