Chair of the Federal Reserve Jerome Powell contradicted Wednesday claims from President Joe Biden that “Putin’s price hike” is to blame for record high inflation.
Testifying before the Senate Banking Committee, Powell was asked about the inflation crisis by Republican Tennessee Sen. Bill Hagerty.
“I realize there are a number of factors that play a role in the historic inflation that we’re experiencing: supply chain disruptions, regulations that constrain supply, we’ve got rising inflation expectations and excessive fiscal spending, but the problem hasn’t sprung out of nowhere,” Hagerty said.
“In January of 2021, inflation was at 1.4%. By December of 2021, it had risen to 7% — a fivefold increase.”
“Since the war in Ukraine began in late February, the rate of inflation has risen incrementally another 1.6% to a current level of 8.6%,” he continued. “Given how inflation has escalated over the past 18 months, would you say that the war in Ukraine is the primary driver of inflation in America?”
“No,” Powell said. “Inflation was high before, certainly before the war in Ukraine broke out.”
A March study from the Research from the Federal Reserve Bank of San Francisco found that approximately “3 percentage points” of inflation at the end of 2021 could have been a result of “fiscal support measures designed to counteract the severity of the pandemic’s economic effect.”
The Federal Reserve hiked target interest rates by three-quarters of a percentage point June 15, projecting a slowing economy and a rise in unemployment. Meanwhile, consumer prices recently reached a four-decade high, with the Consumer Price Index for May of 2022 showing a 8.6% increase year-over-year.