Federal Reserve (Fed) Chairman Jerome Powell said at a news conference after the institution’s monetary policy decision that the delta version of the coronavirus has taken a toll on the US economy, but he hopes vaccinations will help the recovery.
According to the official, the resumption of the pandemic resulted in loss of breath in some areas and some factors related to the disease are affecting job recovery. “There was a very sharp spike with Delta,” he said, which affected schools, travel, job resumption and other activities. “People will go back to work, but it should take longer,” he concluded.
According to Powell, the Fed “does whatever it can to support the economy as long as the recovery continues.” He also noted that demand for work in general remains strong, and managers still expect rapid growth in the US. “Economic growth should continue at a strong pace in the second half of the year,” he said.
Jerome Powell said the bottlenecks seen in the economy – supply-side – could continue for at least a few more months and perhaps until 2022. In a news conference, Powell said the effect of supply constraints has been longer than Fed officials anticipated.
In Powell’s estimation, as the reopening takes place, these bottlenecks could, among other factors, put pressure on inflation. “If continued high inflation becomes a risk, we will use our tools,” Powell said. The leader said inflation should remain high in the coming months before losing strength. Powell also said that the global shortage of semiconductors affects vehicle production.
tall and slim
The chairman of the Federal Reserve (Fed) confirmed that there is a great consensus among leaders about the timetable for the “slim”. In turn, Powell recalled that some board members want the gradual withdrawal of stimuli to begin earlier, which has already been publicly highlighted by some. The statement comes after the authority’s recent monetary policy decision.
According to the official, a “reasonable” payroll in September could already support the start of tapering in November. In his view, we could “easily” initiate a reduction in bond purchases at the November meeting. For that, a moderation in the pace of purchases should be necessary if “substantial progress” continues towards the goals of the Authority. According to the President, the leaders have been discussing the progress of the economy ever since the adoption of bond purchases began.
In terms of inflation, Powell said, “we’ve already exceeded our target,” Powell said. In his view, at this point in time, bond purchases are doing little to support the recovery. As for the “taping”, the leader indicated that it may be appropriate to complete the process by the middle of next year. However, he recalled that the timing and speed of taping is not related to decision-making on interest rates and a potential increase in rates.
Powell said the US central bank would change its rules on directors’ activities, as well as review and revise its code of conduct. “It’s fair that the authorities don’t have the assets that the Fed itself buys,” Powell said, adding that “no one is happy” with revelations about asset deals by central bank officials.
The Fed has come under pressure to oust Dallas regional president Robert Kaplan and Boston regional president Eric Rosengren, who traded stocks and other assets in 2020. Powell said he was unaware of the two executives trading in the markets while in office.