U.S. wages are rising as the economy continues to rebound from the blow dealt by the coronavirus pandemic, but the increases are not happening at a pace that could spark higher inflation, Federal Reserve Chair Jerome Powell said on Wednesday.
“We have seen wages moving up significantly,” Powell said during a hearing before the U.S. House of Representatives Financial Services Committee. “We don’t see them moving up at a troubling rate that would tend to spark higher inflation, but that’s something we’re watching very carefully.”
Powell also said the U.S. economic recovery is stronger than those of other major economies, thanks in part to more robust fiscal support. But with millions of Americans still out of work, officials at the U.S. central bank need to balance their mandate for achieving maximum employment with their price stability goal, Powell said.
“We have to balance those two goals when they are in tension, as they are right now,” Powell said. “But I assure you we will use our tools to make sure that this high inflation we are experiencing does not become entrenched.”
