Fed chair Jerome Powell said Fed is “willing to adapt pretty nimbly on policy as we go through the year” at a confirmation hearing in front of the Senate.
He said steps will be taken towards normalization in regards to interest rates and monetary easing, but no decision has been made on timing.
Powell said he expects inflation to continue until the middle of this year, and his forecast for the economy is “very positive” in the second quarter as he expects Omicron to peak and clear out during the first quarter.
Based on previous observations, Fed expects the economy to be able to deal with these outbreaks and is open to the changing environment.
Monetary policy will have to adapt particularly as it relates to supply blockages, Powell said, emphasizing that there were supply issues which don’t have much to do with monetary policy.
The median at the Fed board is 3 interest rates raises this year, Powell said, but it depends on the progress of inflation and they are very “attentive to the economy.”
Nasdaq has turned positive, up 0.84% while bitcoin is up more than 2% during Powell’s hearing as the chairman says they’ll need 2-3 hearings to sort these things through.
Suggesting Fed may take a more nimble approach and be adaptive to changing circumstances which potentially translates to they’ll go slowly perhaps until at least mid year after which it becomes clearer whether inflation is or not due to supply issues.