US economy ‘no longer needs’ stimulus, declares US Fed chief

He also expects the country to glide through the current surge in coronavirus cases driven by the Omicron variant, with any impact on the economy “short-lived,” Powell said (Photo by Samuel Corum/Getty Images)

The US economy “no longer needs or wants” ultra-stimulative monetary policy, the chief of the Federal Reserve said yesterday.

Jerome Powell told US lawmakers, who were grilling him before deciding on whether to back him to stay in charge of the world’s most influential central bank, that the American economy is strong enough to absorb higher interest rates.

He also expects the country to glide through the current surge in coronavirus cases driven by the Omicron variant, with any impact on the economy “short-lived,” Powell said.

The Fed has embarked on a hawkish tilt recently, with some of the central bank’s policymakers predicting borrowing costs may have to rise sooner than expected to tame inflation, revealed minutes from its latest rate setting meeting published last week.

Powell said inflation, which is running at a 39-year high in the US, was now front of mind for the Fed.