Central South Dakota News

WASHINGTON – U.S. Senator Mike Rounds (R-S.D.) questioned Federal Reserve Chair Jerome Powell this week during a Senate Banking Committee hearing. The session marked Powell’s semiannual appearance before the Committee to discuss monetary policy in the United States.

Rounds addressed Powell on revisions to the Basel III Endgame proposal and criticized policies of the Biden administration, which he claims have contributed to inflation. According to the Joint Economic Committee, the average South Dakota family is now paying over $1,000 more per month for essentials such as shelter, food, and energy compared to when President Biden took office.

“Since President Biden took office, gasoline prices have risen over 54%, energy prices have risen 41%, fuel oil prices have risen 37%. Now, I can go on and on, but you understand what I'm saying is that energy has increased substantially,” Rounds stated. He attributed part of this increase to additional demand post-pandemic but also pointed to investor reluctance following President Biden's decision to cancel the Keystone XL Pipeline. “When he did that, he sent one heck of a message to investors about traditional energy and investing in traditional energy in the United States.”

The full exchange between Rounds and Powell can be watched online. Below is an excerpt from their dialogue:

Rounds: "Mr. Chairman, first of all, thanks for coming in again and visiting with us. I just want to focus on two specific items... let me just ask a specific question and you can kind of pick it apart for me, please. Both you and Vice Chair Barr have confirmed that there will be material changes to every risk type outlined in the proposal... do you believe where the agencies have landed now would be considered a logical outgrowth of the original proposal from last summer?"

Powell: "For those people who are not familiar with it, that's the legal test... if it's not a logical outgrowth that would require reproposal... my view and strongly held view of some of my colleagues on the board is that it will be appropriate for us to put out the changes again for a period of comment."

Rounds: "Do you feel that you have a consensus in the board to allow that to move forward? In terms of an additional comment period?"

Powell: "Yes... we have to get their agreement too."

Rounds also probed into inflation dynamics: “I want to talk about what parts of inflation are and what parts you can control... Since President Biden took office, gasoline prices have risen over 54%, energy prices have risen 41%, fuel oil prices have risen 37%.”

He asked Powell about attributing inflation between demand-side factors within Fed control versus supply-side challenges influenced by policy decisions.

Powell responded: “Any attempt to reduce that to a precise number would be inappropriate because it's so uncertain... there's a significant demand element, and there's a significant supply element.” He acknowledged both forces are at play but refrained from providing precise estimates.

Rounds concluded by seeking confirmation from Powell regarding acknowledgment of both demand- and supply-side factors influencing inflation.

Powell affirmed: “It’s both. It’s definitely both.”