US Federal Reserve Chair Jerome Powell has said the US economy is making "sustained improvement" from the impact of the coronavirus pandemic but that the health crisis will continue to pose risks to the economy.
Powell also said inflation has increased notably in recent months, adding that the Federal Reserve thinks the current spike will soon fade away.
Powell did not say much on monetary policy, keeping it ambiguous if the central bank would withdraw the stimulus support for the economy in the near future.
Bet on Vaccination
"Progress on vaccinations has limited the spread of Covid-19 and will likely continue to reduce the effects of the public health crisis on the economy," Powell said in prepared remarks ahead of the meeting of the House Select Subcommittee on the Coronavirus Crisis.
"However, the pace of vaccinations has slowed and new strains of the virus remain a risk. Continued progress on vaccinations will support a return to more normal economic conditions," Powell added, according to IANS.
Inflation and Jobs
Public health experts say the highly contagious Delta variant will pose threat to the US in the next wave of the coronavirus outbreak. The variant is expected to cause an upsurge in infections, and the government's hopes rest on accelerating the vaccination drive.
The fact that inflation has spiked in recent months points to the increased opening up of the economy and more people hitting back the work trail.
"This reflects, in part, the very low readings from early in the pandemic falling out of the calculation; the pass-through of past increases in oil prices to consumer energy prices; the rebound in spending as the economy continues to reopen; and the exacerbating factor of supply bottlenecks," Powell said.
"As these transitory supply effects abate, inflation is expected to drop back toward our longer-run goal," he added.
The Fed chief said the central bank will continue to support the economic recovery. "We at the Fed will do everything we can to support the economy for as long as it takes to complete the recovery," Powell said.