Federal Reserve's Powell: High inflation 'exacts a toll'

WASHINGTON (AP) — High inflation is taking a toll on American families, Federal Reserve Chair Jerome Powell acknowledged in remarks to be delivered at a Tuesday congressional hearing, where he is sure to face tough questions on the subject.

“We know that high inflation exacts a toll, particularly for those less able to meet the higher costs of essentials like food, housing, and transportation,” Powell said in prepared testimony.

The Senate Banking Committee will hold a hearing on Powell's nomination to a second four-year term Tuesday. President Joe Biden announced Powell's reappointment in late November.

Inflation has soared to the highest levels in four decades, and on Wednesday the government is expected to report that consumer prices jumped 7.1% over the past 12 months, up from November's 6.8% annual increase.

Powell's nomination is likely to be approved by the Senate with bipartisan support but members of Congress are sure to interrogate Powell on whether the Fed can successfully take steps to rein in inflation without slowing the economy so much that it falls into recession.

Economists and former Fed officials, are increasingly raising concerns that the Fed is behind the curve on inflation. Last Friday's jobs report, which showed a sharp drop in the unemployment rate to a healthy 3.9%, and an unexpected wage increase, has fanned those worries.

While lower unemployment and higher pay benefit workers, those trends can potentially fuel rising prices.

At its last meeting in December, Powell said the central bank is rapidly accelerating its efforts to tighten credit with the goal of reining in inflation. The Fed will stop buying billions of dollars of bonds in March, ahead of its previously announced goal of doing so in June. Those bond purchases are intended to...