Fed's Powell: 'Frustrating' that supply chain kinks aren't getting better

FILE PHOTO: Federal Reserve Chairman Jerome Powell testifies during a Senate Banking, Housing and Urban Affairs Committee hearing on the CARES Act, at the Hart Senate Office Building in Washington, DC, U.S., September 28, 2021. Kevin Dietsch/Pool via REUTERS

(Reuters) -Federal Reserve Chair Jerome Powell on Wednesday said it was “frustrating” that supply chain bottlenecks are not improving this deep into the recovery from the recession triggered by the coronavirus, and it appears they will persist into next year and continue to prop up inflation.

Powell, speaking at a virtual European Central Bank event alongside the heads of the ECB, Bank of Japan and Bank of England, also said that the ongoing pandemic remains the key factor steering the course of U.S. monetary policy.

“It is frustrating to acknowledge that getting people vaccinated and getting Delta under control 18 months later still remains the most important economic policy that we have,” Powell said in response to a question on the U.S. economic outlook. “And it’s also frustrating to see the bottlenecks and supply chain problems not getting better, in fact at the margin apparently getting a little bit worse.”

“We see that continuing into next year probably and holding inflation up longer than we had thought,” Powell said. “But ultimately the outlook for next year among my colleagues and me at the Fed for next year is quite a strong year with growth quite above trend and unemployment reaching significantly lower levels than now.”

Fed officials at their meeting earlier this month downgraded their views of U.S. gross domestic product growth for this year but upgraded estimates for next year, reflecting expectations that activity for the balance of this year will be stymied by supply issues and those restraints will fade in 2022.

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