Jerome H. Powell, the Federal Reserve chair, said on Wednesday that it could take years for the central bank to coax weak inflation sustainably higher and reiterated that the labor market would take time to fully heal from the pandemic downturn.
Mr. Powell’s comments, delivered during testimony before the House Financial Services Committee, reinforced that the central bank would be extremely patient in slowing down its policy support as it tried to help to fuel a complete recovery. The Fed chief had soothed the stock market on Tuesday by delivering a similar message during testimony before Senate lawmakers.
Mr. Powell has been pledging for the past 11 months that the Fed would do whatever it could to get the economy through the pandemic, but his comments have become noteworthy at a time when some lawmakers — in particular Republicans — have become worried that big government spending could fuel economic overheating that leads to rapid inflation.
Fed officials have been clear that weak price gains, not out-of-control ones, are the problem of the modern era. Mr. Powell doubled down on that message Wednesday. Central bankers try to keep price gains from slipping ever lower, because disinflation can be economically damaging. The Fed targets low, but stable, increases, shooting for 2 percent annual gains on average over time.
“We live in a time when there are significant disinflationary pressures around the world,” Mr. Powell said on Wednesday, and so officials are trying to bolster prices. “We believe we can do it, we believe we will do it. It may take more than three years.”
That’s consistent with the Fed’s published economic expectations, but it reinforces how patient the central bank is likely to be in the years ahead. Economists broadly expect a temporary pop in prices this year, but Mr. Powell has been clear that a short-term jump is different from sustained higher inflation.
“We know that inflation dynamics evolve over time, but they don’t tend to change overnight,” he said. “What I see is an economy where there is still a great deal of slack.”
The Fed is using its policies to try to guide the economy back to health. Besides buying huge quantities of bonds, the Fed has also held interest rates near-zero since last March. The central bank has said it wants to see specific progress toward its two goals — maximum employment and stable prices — before removing that support.
“We’ve been very specific with liftoff,” Mr. Powell said. “We’d need to see labor market conditions that are consistent with maximum employment, inflation at 2 percent, and inflation expected to move moderately above 2 percent for some time.”
He acknowledged that the criteria for slowing bond purchases was more subjective and based on whether the Fed saw “substantial” further progress.
Workhorse, a start-up striving to be a major producer of electric delivery vans, got bad news on Tuesday: It lost out on a $482 million deal to make tens of thousands of vehicles for the United States Postal Service. And now investors are punishing its stock.
The company’s shares fell by almost 50 percent on Tuesday after the Postal Service announcement and were down an additional 14 percent in morning trading on Wednesday.
Workhorse, an Ohio-based company with a factory in Indiana, was counting on the postal contract to provide a surge in revenue. By early February, its shares had risen from under $2 to more than $40 in less than a year, largely on hopes it would win all or part of the postal contract. Instead, the Postal Service awarded the work to Oshkosh Defense, a subsidiary of the Oshkosh Corporation of Wisconsin that makes military vehicles and mobility systems.
Under an initial deal for what the Postal Service is calling its next-generation delivery vehicle, Oshkosh is to complete the design and then assemble 50,000 to 165,000 vehicles over 10 years.
The Oshkosh vehicles will be equipped with either fuel-efficient gasoline engines or electric batteries, and they will be retrofitted to keep pace with advances in electric vehicle technology, the Postal Service said. Workhorse proposed…