The Federal Reserve will maintain its present course to achieve its goals of maximum employment and inflation that averages 2% over time, though hurdles persist, Chairman Jerome Powell said Tuesday during his semi-annual monetary policy report before the Senate Banking Committee.
"In recent weeks, the number of new (COVID-19) cases and hospitalizations has been falling, and ongoing vaccinations offer hope for a return to more normal conditions later this year," Mr. Powell said. "However, the economic recovery remains uneven and far from complete, and the path ahead is highly uncertain."
Following a line of questions from Sen. Tim Scott, R-S.C., on the Biden administration's $1.9 trillion stimulus proposal, and deficits and inflation concerns, Mr. Powell said he doesn't see inflation as a threat in the near term.
"On inflation, there perhaps once was a strong connection between budget deficits and inflation; there really hasn't been lately," he said. "That doesn't mean it won't return, but again, my expectation will be that inflation will probably be a bit volatile over the next year or so due a significant amount to particular things to do with the pandemic."
Mr. Powell added: "We've had a very volatile economy for the last 15 years and inflation has kind of just done what's it's going to do; it didn't go up."