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Powell stresses commitment to full employment and low rates | News – Kansas City, Missouri

Kansas City, Missouri 2021-02-10 16:08:40 –

Washington (AP) — Federal Reserve Board Chairman Jerome Powell emphasized on Wednesday the Federal Reserve’s commitment to lower unemployment to the lowest in decades that stood before the pandemic. Little concern is raised about the potential risk of high inflation and financial market instability.

Powell emphasized in a webcast to The Economic Club of New York that the US job market remains weak, despite improvements from the depth of the pandemic recession.

And he has the Fed Not considering the increase Benchmark short-term interest rates from near zero levels. He also said the central bank is not currently considering reducing its monthly bond purchases to the $ 120 billion scale aimed at keeping long-term interest rates low.

The chairman did not mention signs of recent market bubbling, such as the soaring stock market or explosive fluctuations in the prices of other stocks targeted by GameStop and regular day traders.

He emphasized that millions of job losses have fallen disproportionately to the most disadvantaged households, as was often the case before.

“Despite the surprisingly fast recovery at an early stage, we are still far from a strong labor market where profits are widely shared,” Powell said.

In a note to clients, Krishna Guha, an analyst at investment bank Evercore ISI, said Powell’s words “would be noteworthy for early-generation central bankers.” “While downplaying concerns about potential overinflation, he has probably put a strong labor market recovery at the center of the central bank’s agenda more than ever,” he said in his speech.

He said that about 4 million people absent from work stopped looking for jobs, which means they are not counted as unemployed. If so, the unemployment rate will be close to 10%.

And while unemployment during the highest-paying quarters of Americans was only 4%, unemployment during the poorest quarters was “amazing 17%,” Powell said. I did.

Last year’s Fed Refined definition of maximum employment As a “broad and comprehensive” goal that includes consideration of black and Hispanic unemployment and overall unemployment.

President Joe Biden Pushing A $ 1.9 trillion financial remedy package that raises concerns about potential inflation among some economists. This is because millions of Americans who were lucky enough to continue working have accumulated significant savings. As vaccines become more widely distributed, those savings could foster an outburst of spending beyond what companies that are still decimating can handle, spurring higher prices.

However, Powell expressed little concern about the occurrence of such dynamics. Last month, he suggested that the resulting high inflation was likely to be temporary.

Powell also gave Biden’s proposed bailout plan from Peter Blair Henry, a professor of economics at New York University, about the current output of the economy and what it will be like, announced by some analysts such as the Congressional Budget Office. I was asked how to compare with my estimate. If it returns to full health. Most estimates of that gap are much smaller than Biden’s $ 1.9 trillion package.

The Federal Reserve Board said questions about the amount of financial assistance should be decided by Congress and the White House. However, he also suggested that such calculations are inaccurate and may not be a useful guide to policy.

Powell also emphasized the fact that just before the virus intensified, inflation remained low even as the unemployment rate dropped to 3.5%.

“Without the pandemic, there was all the reason to expect the labor market to be further strengthened without causing the feared increase in inflation,” he said.

So far, there are few signs of price increases. Consumer prices rose 1.4% year-on-year in January, The government said Wednesday.

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