United States Federal Reserve Chair Jerome Powell during his testimony before the House Financial Services Committee assured that the country will return to 2% inflation, but that the level of rate hikes in force at that point is still uncertain.
Commenting on the balance sheet target, Powell stressed that reserves must be abundant, but wanted that a buffer must exist on top of it to prevent reserve scarcity due to the volatility of demand. He shared his belief that the Fed is "moving in that direction pretty smartly."
The banker reminded the Committee that the central bank does not want to go back to a scarce reserves level, noting that it is important that the balance sheet "does not just grow with every cycle."
