Federal Reserve Chair Jerome Powell addressed the House Financial Services Committee on Wednesday, emphasizing the Fed’s commitment to its dual mandate of promoting maximum employment and stable prices. Powell acknowledged the hardship caused by high inflation and reiterated the Fed’s dedication to bringing inflation back down to the 2% goal.

“The U.S. economy slowed significantly last year, and recent indicators suggest that economic activity has continued to expand at a modest pace. Although growth in consumer spending has picked up this year, activity in the housing sector remains weak, largely reflecting higher mortgage rates,” Powell noted. He also highlighted that the labor market remains very tight, with job gains averaging a robust 314,000 jobs per month over the first five months of the year.

Inflation remains well above the Fed’s longer-run goal of 2%. “Despite elevated inflation, longer-term inflation expectations appear to remain well anchored, as reflected in a broad range of surveys of households, businesses and forecasts of forecasters, as well as measures from financial markets,” Powell stated. He also mentioned that the FOMC has significantly tightened the stance of monetary policy, raising the policy interest rate by five percentage points since early last year and continuing to reduce securities holdings at a brisk pace.

On the topic of regulatory proposals, Powell emphasized the importance of transparency and consistency, particularly in relation to capital requirements. “We want banks to be resilient to shocks. We want them to be able to lend in good and bad times. We want, in particular the GSEs, the eight largest banks, to have high levels, very high levels of capital liquidity,” he said. Powell also highlighted the tradeoff between higher capital and the costs associated with it, and the need to balance these factors.