Senator Kennedy questions Federal Reserve Chairman Jerome Powell about inflation and capital requirements for banks. **Powell explains that we had very little inflation for 25 years** and that inflation depends on whether tax increases or spending cuts are part of a congressional budget plan. If there were no spending cuts, he believes there would be a small effect through the stimulation of the economy due to increased demand, which would ultimately impact inflation. Similarly, if federal spending is reduced by 10%, less fiscal stimulus would lead to less spending and economic activity, negatively impacting inflation.
New capital requirements will primarily apply to the eight largest banks and smaller community banks under $100 billion will likely not be affected. Senator Kennedy recognizes that the big banks are doing well currently, but Powell notes that 10 years ago, there were concerns about their stability, and raising capital standards helped address those concerns.
**you sure about that JPow!?**
