Federal Reserve Bank Chair Jerome Powell will speak at a press conference in Washington, DC on December 11, 2019.
Eric Baradat | AFP | Getty Images
Inflation and employment are still well below the Federal Reserve Board’s goals, and simple monetary policy is likely to be maintained, central bank chairman Jerome Powell Said on Tuesday.
Despite soaring bond yields this year Growing concerns about inflationPowell said price pressures remained largely subdued and the economic outlook remains “very uncertain.”
The Federal Reserve Board said in a prepared statement by the Senate Finance Committee, “The economy is far from employment and inflation targets, and it will take some time before substantial further progress is achieved. It’s likely. “
He added that the Fed “promises to use every tool to support the economy and ensure recovery from this difficult time as much as possible.”
However, the speech did not mention the most pressing concerns of the market: the 2021 long-term government bond yield surge was at an unprecedented level. COVID-19 Pandemic.. For example, 30-year bonds rose more than 0.5 percentage points and benchmark 10-year yields rose 44 basis points.
Powell said the pandemic “has a big mark on inflation,” and said it was not a threat to the economy when balanced.
“Consumer prices have partially rebounded during the rest of last year following the sharp fall in spring, but prices remain particularly soft in some of the sectors most adversely affected by the pandemic,” he said. There is. ” “Overall, on a 12-month basis, inflation is below the long-term target of 2%.”
Last year, the Fed modified its approach to inflation. In the past, if the unemployment rate fell, we thought that strengthening the employment market would push up prices and imposed a preventive tax hike.
We are currently taking an approach that allows inflation to exceed an average of 2% over a period of time before tightening policy.
“This change means not tightening monetary policy just to respond to the strong labor market,” Powell said.
For the rest of the economic assessment, Powell hopes for a recent reduction in coronavirus cases and continued deployment of the vaccine, despite the benefits remaining “heterogeneous and far from complete.” He said he was.
“Don’t underestimate the challenges we are facing now, but development shows an improvement in our outlook later this year, especially as continued progress in vaccination accelerates our return to normal activity. It should help, “he said. “In the meantime, we need to follow the advice of health professionals, observe social distance measurements and wear masks.”
Consumer behavior also shows the dichotomy of strong spending on commodities. Big hit January retail salesHowever, while many bars, restaurants and hotels across the country operate with limited capacity, spending on services remains weak.
Powell also said blacks, Hispanics and other minorities are still struggling despite the unemployment rate dropping from the pandemic’s highest of 14.8% to the current 6.3%, closing the gap in job growth. It pointed out.
He also said the housing sector “has fully recovered from the recession, but business investment and manufacturing production have also recovered.” Powell added that aggressive policies from both the Fed and Congress were a major factor in the recovery.
Inflation remains “soft,” Powell said, and the Fed is committed to its current policy stance.
Source link Inflation remains “soft,” Powell said, and the Fed is committed to its current policy stance.