Powell's warning to Congress: Inflation a ?severe threat? to jobs

But the potential clash over the Fed's plans to tighten monetary policy could be a harbinger of conflicts to come with Democrats, who want to maintain the labor market's robust growth, and even some Republicans, who complain that the central bank has waited too long to rein in inflation.The Fed, which has poured trillions of dollars into the markets to fuel lending and spending, is already starting to pull back on that support as costs rise, unemployment drops and the coronavirus pandemic lingers with record-breaking numbers of new cases.Powell dug in with lawmakers on the Senate Banking Committee during the confirmation hearing about how the central bank will chart a course to lower inflation without choking off a promising job market recovery and without spooking financial markets.Here are some key moments:Powell repeatedly emphasized that high inflation is top of mind for the Fed. Under his leadership, the central bank has shifted its focus toward ensuring that as many workers as possible benefit from economic growth. “What we’re seeing is an economy that functions right through these waves of Covid,” he said.Ultimately, how many rate hikes are coming this year is “going to depend on data.” “We honestly don’t know,” he added, saying there was the potential for both growth and inflation to speed up or slow down.Powell’s message on the labor side was upbeat: “We’re very rapidly approaching or at maximum employment.” That basically means workers right now have lots of leverage over where they work and how much money they make.This is a key consideration for the Fed. It’s part of the central bank’s job to ensure that employment is as high as possible without leading to too-high inflation.But it also means that the Fed thinks it’s not just supply shortages that could exacerbate inflation in 2022.