On March 24, local time, Federal Reserve Chairman Powell and US Treasury Secretary Yellen attended the second hearing, continuing the theme of the first session with the House Financial Services Committee and continuing discussions with members of the Senate Banking Committee on COVID-19 relief and other measures taken to restore the US economy. The two officials reiterated that although the US economy is recovering, the government's relief measures are still critical to support people and businesses.
Powell said in his speech that the government avoided the worst possible outcome of the economic downturn caused by the COVID-19 pandemic through active spending countermeasures and ultra-low Fed interest rates. “However, [economic] recovery is far from complete, so we will continue to provide the economy with the support it needs.”
Powell said that the Fed's forecast of the unemployment rate reflects expectations of an increase in the labor participation rate; increasing labor participation will push up the unemployment rate.
Powell pointed out that the rise in bond yields reflects an improvement in the economic outlook; if this is not an orderly process, or if tightening conditions threaten economic recovery, there are concerns; I don't think inflation will be too high, but there are tools to solve this problem and lead it back to 2%; economic growth in 2021 should be very strong; firm commitment to the 2% inflation target is fundamental to achieving this goal; indeed, it is expected that prices will face upward pressure in the near future; the upward pressure on prices is expected to be temporary.
In her speech, Yellen pushed for the recently passed $1.9 trillion bailout plan, but at the same time said that her team is currently processing...