Washington (US), September 29: U.S. Federal Reserve Chairman Jerome Powell said on Tuesday that inflation pressures could last longer than expected amid supply bottlenecks.
"Inflation is elevated and will likely remain so in coming months before moderating," Powell said at a hearing before the Senate Banking Committee.
"As the economy continues to reopen and spending rebounds, we are seeing upward pressure on prices, particularly due to supply bottlenecks in some sectors. These effects have been larger and longer lasting than anticipated, but they will abate," he said.
Powell noted that bottlenecks, hiring difficulties and other constraints could prove to be "greater and more enduring than anticipated," posing upside risks to inflation, as the process of reopening the economy continues.
The Fed chief also admitted that U.S. inflation is now more concerning than earlier this year as some of the supply bottlenecks have "gotten worse."
"If sustained higher inflation were to become a serious concern, we would certainly respond and use our tools to ensure that inflation runs at levels that are consistent with our goal," he said.
The Fed last week kept its benchmark interest rate unchanged at the record-low level of near zero, while signaling that the central bank may begin tapering asset purchases soon.
The Fed has pledged to continue its asset purchase program at least at the current pace of 120 billion U.S. dollars per month until "substantial further progress" has been made on employment and inflation.
The consumer price index (CPI) increased 5.3 percent over the past 12 months through August, slightly down from the 5.4 percent pace in the 12 months through June and July, according to the U.S. Labor Department.
U.S. Treasury Secretary Janet Yellen also said on Tuesday that the elevated inflation this year largely reflected supply disruptions associated with the COVID-19 pandemic.
"These supply disruptions will likely fade. Again, this view is not solely my own - it is widely shared among economists and financial market participants," Yellen said in a speech to the National Association for Business Economics.