Federal Reserve Board of Governors (FRB) Chairman Powell has indicated that financial authorities are far from weakening support for the US economy. He also expressed his hope that economic activity would be normalized and improved by the end of the year.
The chairman testified at the Senate Banking Commission on the 23rd. “The economy is far from reaching the employment and price targets of financial authorities, and it will take some time before we can make further significant progress,” he said.
Fed Chair Powell
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He also said that he was less serious about inflation concerns as the government’s large-scale additional economic measures and the growing number of Americans receiving the new coronavirus vaccine and the cumulative demand emerged. I didn’t see it. He also pointed out that the recent rise in bond yields, which has caused turmoil in the stock market, is a “sign of confidence” in the strong economic outlook.
Financial authorities are currently buying bonds at a monthly pace of $ 120 billion, at the same pace until “more significant progress” is made towards maximum employment and price stability. Has stated that it will continue to purchase.
Powell pointed out that it is important to determine the reason for the rise in bond yields. “In a way, it’s a sign of market confidence that we’ll get a strong and complete recovery,” he said.
Regarding the economic outlook, he said, “We should not underestimate the current difficult situation, but it also suggests an improvement in the outlook within the year.” “Especially the ongoing progress in vaccination will help speed up normalization of activity,” he said.
In a question and answer session after the opening testimony, he said that this year’s rice growth rate could reach 6%. Last year it was minus 2.5%.
“High unemployment is especially serious among low-wage workers, as well as minorities such as African Americans and Hispanics,” he said. “Economic turmoil has changed the lives of many and is very uncertain about the future.” It created a feeling. “
In addition to maximizing employment, the chair reiterated that the policy rate will remain near zero until inflation rises to 2% and is on track to settle at a slightly higher level.
“We don’t think inflation will rise to awkward levels,” Powell said.
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Powell said inflation is expected to accelerate over the next few months, but the impact will be temporary, in comparison to a year ago when economic activity was virtually halted and inflation was curbed. Showed recognition.
In addition, he pointed out that cumulative demand may become apparent as vaccination progresses, which may push up prices by the end of the year. However, he said it is unlikely that inflation will rise significantly or last for a long time.
Original title:Powell Signals Fed to Keep Buying Bonds Even as Outlook Improves(Excerpt)
(Update with comments on inflation and bond yields)
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