Federal Reserve Chair Jerome Powell said Wednesday that US inflation is expected to remain high in the coming months

“Inflation has increased notably and will likely remain elevated in coming months before moderating,” he told the House of Representatives Committee on Financial Services during his semi-annual monetary policy report to Congress.

Powell said the coronavirus pandemic created production bottlenecks and supply constraints, and strong demand in certain sectors has been noticed with normalization, thus limited production has led to rapid price increases for some goods and services.

“Measures of longer-term inflation expectations have moved up from their pandemic lows and are in a range that is broadly consistent with the FOMC’s [Federal Open Market Committee] longer-run inflation goal,” he said.

Although the Fed has repeatedly said it would allow inflation to float above its 2% target for some time to heat the American economy, inflation has recently increased well above that level.

Consumer prices rose 0.9% in June on a monthly basis and soared 5.4% on an annual basis. Producer prices were up 1% and 7.3%, respectively.

Although the labor market has continued to improve, Powell said “there is still a long way to go.”

“Labor demand appears to be very strong; job openings are at a record high, hiring is robust, and many workers are leaving their current jobs to search for better ones,” he said.

But he noted that “the labor market has not moved up from the low rates that have prevailed for most of the past year.”

The number of unemployed individuals in the US rose to 9.5 million in June, up from 9.3 million the previous month, the Labor Department said July 2.

The unemployment rate rose to 5.9% in June, after standing at 5.8% in May.

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