Powell Gets Sharp Warning From Senator Over Fed Inflation Target

Jerome Powell confronted skepticism from Republican Senator Patrick Toomey on Tuesday when the Federal Reserve chairman explained why the central bank is undertaking a yearlong review of its approach to achieving its 2 percent inflation goal.

Low interest rates over the past four decades have made it more likely that the Fed’s policy rate will drop to zero again during future recessions, Powell said, making it more difficult for the central bank to stimulate economic growth. That, in turn, may help lower inflation expectations, a force Powell called “the most important driver of actual inflation.”