The Strategist

US Fed to continue soft policy until economy recovers


03/05/2021 - 04:30



US Federal Reserve Chairman Jerome Powell confirmed on Thursday that the central bank intends to keep monetary policy soft until there is a significant improvement in the labour market.



pixabay
pixabay
"We are still extremely far from our goals of maximum employment and an average annual inflation rate of 2.0%," the Fed chief told the Wall Street Journal. Meanwhile, long-term borrowing costs are rising on the back of a more positive economic outlook, which could hamper the Fed's efforts to keep interest rates low.

The Fed will hold its next two-day meeting on 16-17 March. Powell said that the central bank will continue to maintain an extremely soft monetary policy and implement large-scale asset purchases until "substantial progress" has been made on employment and inflation targets.

The Fed chairman expects this to take some time, but has repeatedly refused to specify a timeline.

When asked about the recent surge in government bond yields, which is driven by investor expectations of faster inflation and GDP growth this year, Powell said that it "was noticeable and got my attention".

source: cnn.com




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