Federal Reserve Chair Jerome Powell in an interview with “60 minutes”, stated that the US economy was at an “inflection point,” and that growth and job creation were poised to accelerate in future.
In the interview, Federal Reserve Chair provided an optimistic economic outlook, in contrast to previous remarks made on the economy’s recovery and its growth. But adding a word of caution, he also stated that it wasn’t the end. He cautioned that “there really are risks out there,” specifically coronavirus flare-ups, if Americans returned to their normal life too quickly.
To talk about the specifics, Mr. Powell said that the American economy “has brightened substantially” as more people have been vaccinated and businesses have been reopened. “What we’re seeing now is really an economy that seems to be much at an inflection point,” Powell told “60 minutes” during the interview. “And that’s because of widespread vaccination and strong fiscal support, strong monetary policy support. We feel like we’re at a place where the economy’s about to start growing much more quickly and job creation coming in much more quickly. The outlook has brightened substantially.”
He stated that “The principal risk to our economy right now really is that the disease would spread again more quickly,”. He further added, “And that’s troubling. It’s going to be smart if people can continue to socially distance and wear masks.” According to the CDC data, more than 183 million vaccines have been administered in the United states.
Since March 2020, the Fed has kept the interest rates near zero and has been actively buying about $120 billion in government-backed bonds each month. These policies are meant to stoke spending by keeping borrowing relatively cheap. Fed has been clear that it will continue its support to the economy until it is closer to its goals of maximum employment and stable inflation.
Mr. Powell also additionally reiterated that the central bank would consider raising rates when the labor market recovery was essentially complete, and when they’ll be back to maximum employment, and inflation.
Talking about the current economic downturn, Powell stated that the chances of the repetition of the 2008 financial crisis were “very low”. Instead, Powell mentioned that the “cyber risk” was the main threat, citing examples of large firms losing the ability to track payments its disbursing.
He stated that “We spend so much time and energy and money guarding against these things. There are cyber-attacks every day on all major institutions now, that’s a big part of the threat picture in today’s world.”
Last month, Powell said that any increase in inflation over the summer months would be temporary and not concerning for its monetary policy. During his interview with “60 Minutes”, Powell reiterated that past economic cycles showed that inflation didn’t increase much as unemployment went down.
“We do have the ability to wait to see real inflation, and that’s what we plan on doing,” Powell stated in the interview.
Discussing inflation, Mr. Powell once again made it clear that the Fed wanted to see “sustainable” price increases before it adjusted monetary policy. He stated that the inflation was below 2 percent and he wanted it to be just moderately above 2 percent, so as to make any changes to the monetary policy. “And when we get that,” he added, “that’s when we’ll raise interest rates.”
Figures about American recovery and growth show that the economy is recovering, albeit slowly. Last month, the employers added more than 900,000 workers to payrolls , but the country is still missing millions of jobs compared with February 2020.