WASHINGTON—Federal Reserve Chairman Jerome Powell told lawmakers Tuesday he doesn’t expect the $1.9 trillion stimulus package will lead to an unwelcome increase in inflation, but he emphasized that the central bank has tools to deal with rising price pressures if necessary.
“We might see some upward pressure on prices. Our best view is that the effect on inflation will be neither particularly large nor persistent,” he said, reiterating comments he has made repeatedly since the measure was enacted earlier this month.
Critics of the Fed’s policies have said a surge of consumer spending spurred by the stimulus bill, which includes $1,400 payments to most Americans and enhanced unemployment benefits to deal with the effects of the coronavirus pandemic, will coincide with an already improving economy to stoke consumer price increases.
Mr. Powell said that the Fed remained strongly committed to keeping the public’s expectations for future inflation under control, as they have been for decades, and that he didn’t believe a one-time spending surge that leads to temporary price increases would change those expectations.
The central bank leader made the remarks Tuesday at his first joint appearance with Treasury Secretary Janet Yellen on Capitol Hill, where they testified on the government’s pandemic relief efforts.
