By Yasin Ebrahim

Fxgecko.com – Federal Reserve Chairman Jerome Powell will stress that the U.S. central bank will continue to use its tools to support a strong labor market and prevent the risk of elevated for longer inflation, according to prepared remarks ahead of his testimony Tuesday for the Senate Banking Committee.  

"We will use our tools to support the economy and a strong labor market and to prevent higher inflation from becoming entrenched," Powell will say in prepared remarks at his confirmation hearing.  "I would like to thank President Biden for nominating me to serve a second term as Chair of the Board of Governors of the Federal Reserve System."

The Fed chief will talk "sustained improvement” in the economy despite the ongoing pandemic, which has "given rise to persistent supply and demand imbalances and bottlenecks, and thus to elevated inflation." 

"On the eve of the pandemic, the U.S. economy was enjoying its 11th year of expansion, the longest on record ... [but] this attractive picture turned virtually overnight as the virus swept across the globe," according to the prepared testimony. 

The remarks came just days ahead of the U.S. inflation report due Wednesday, expecting to show that the pace of inflation increased at its fastest pace in December since 1982.

Against the backdrop of elevated inflation, bets on the a more aggressive pace of rate hikes have continued to ratchet up, with Wall Street consensus now leaning toward four rate hikes this year, with the first hike as soon as March. 

"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. We are strongly committed to achieving our statutory goals of maximum employment and price stability." Powell is expected to say in testimony.