Fed chief talks up swift US recovery

Credits country’s rising Covid vaccination rate and powerful policy support
Fed chief talks up swift US recovery

Federal Reserve Chairman Jerome Powell.

The head of the Federal Reserve Jerome Powell has said the US economy is at an “inflection point” with stronger growth and hiring ahead thanks to the country’s rising Covid vaccination rate and powerful policy support, but he warned that the pandemic remains a threat.

“We feel like we’re at a place where the economy is about to start growing much more quickly and job creation coming in much more quickly,” Mr Powell said.

“The principal risk to our economy right now really is that the disease would spread again. It’s going to be smart if people could continue to socially distance and wear masks,” he said.

Fed officials have repeatedly stressed that the US economy continues to need aggressive monetary policy support as it recovers from the pandemic, even as the outlook brightens amid widening vaccinations.

That dovish view has helped power US stocks to fresh record highs as investors shrug off inflation concerns amid powerful aid from Washington.

“What we’re seeing now is really an economy that seems to be at an inflection point. And that’s because of widespread vaccination and strong fiscal support, strong monetary policy support,” Mr Powell said.

Minutes of the US central bank’s March meeting released last week said policy makers expect it will likely be “some time until substantial further progress” was made on employment and inflation. That refers to the tests they’ve set for scaling back bond purchases of $120bn (€138bn) a month.

Their latest forecasts show officials don’t expect to raise interest rates from near zero before the end of 2023, even as they sharply upgraded projections for growth and employment this year.

Mr Powell was put on the Fed board by Barack Obama and elevated to the central bank’s helm by his successor Donald Trump. His four-year term as chair expires next February and he’s given no indication that he wouldn’t serve a second stint if asked by president Joe Biden.

Mr Powell has repeatedly deflected questions over whether he’d like to stay in the job.

Mr Biden, whose team could start considering the choice of Fed chair in the coming months, said last week that he’d not spoken with Mr Powell since becoming president out of respect for the Fed’s independence.

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