The Federal Reserve Chair testifies before a Senate Banking Committee hybrid hearing on oversight of the Treasury Department and the Federal Reserve on Capitol Hill.
Powell said the central bank could step up its efforts to boost the economy.
In an appearance before a Senate committee, the Fed chief said he thinks reducing the pace of monthly bond buys can move more quickly than the $15 billion a month schedule announced earlier this month.
The issue will be discussed at the December meeting.
At this point, the economy is very strong and inflationary pressures are higher, and it is appropriate in my view to consider wrapping up the taper of our asset purchases, which we actutally announced at the November meeting, perhaps a few months sooner. We will discuss that at our meeting.
Government bond yields rose after Powell commented. Early indications are that the variant of Covid is milder than previous versions, and that the comments added worry to a market already cautious.
The Federal Open Market Committee, which sets monetary policy, said at its November meeting that it would cut the pace of bond purchases by $10 billion a month.
The post-meeting statement indicated that the pace of purchases would be adjusted in November and December if necessary.
Committee members were prepared to raise interest rates if inflation continued, according to the minutes from the meeting.
The Fed had been buying at least $120 billion a month, which included 80 billion in Treasurys and 40 billion in mortgage backed securities.
If the committee chooses to accelerate the pace of bond purchases, the Fed could raise interest rates as early as the spring.
Markets are currently pricing in at least two quarter-percentage-point hikes in 2022, and possibly a third by December, while the September projections from Fed officials pointed to a less aggressive timetable. The projections will be updated in December.
The data points show that inflation is at its highest level in more than 30 years.
Powell faced a lot of questions about inflation and what the Fed was doing to deal with it during his appearance before the Senate Banking, Housing and Urban Affairs Committee.
Powell says inflation is not leaving a lasting mark on the economy. The chairman said that the word was probably not useful anymore.
There are different meanings to the word transitory. It has a sense of short-lived. Powell said that they use it to mean that it won't leave a permanent mark on the economy. I think it is a good time to stop using that word and try to explain what we mean.
Powell said that the Fed would keep an eye on inflation.
You will see that our policy continues to adapt. He said that they would use their tools to make sure that inflation doesn't get entrenched.
