Saturday, August 28, 2021

US economy on track for strong jobs market despite Delta, says Fed’s Powell

Federal Reserve Chair Jerome Powell holds a news conference following the Federal Open Market Committee meeting in Washington December 11, 2019. — Reuters pic
Federal Reserve Chair Jerome Powell holds a news conference following the Federal Open Market Committee meeting in Washington December 11, 2019. — Reuters pic

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WASHINGTON, Aug 27 — The US economic recovery is on track to return to a strong labour market, and the central bank could begin to withdraw its stimulus measures by year-end, Federal Reserve Chair Jerome Powell said today.

But the Fed leader stressed that there was no hurry to raise the benchmark lending rate in response to temporary inflation pressures.

In his highly anticipated speech to the annual Jackson Hole central banking symposium, Powell said despite the impact of the Delta variant of Covid-19, the economy has continued to recover and show strong job growth.

While inflation is currently running at a high 4.2 per cent annually as of July, Powell said it was likely to decline as temporary pressures, like skyrocketing prices for used cars, recede.

He warned that moving to respond to temporary inflation pressures “may do more harm than good.”

“The ill-timed policy move unnecessarily slows hiring and other economic activity and pushes inflation lower than desired,” he said, warning that with the labor market still recovering, “Such a mistake could be particularly harmful.”

Any move to taper the pace of bond buying would still leave a large amount of stimulus in place, he added.

Powell did not provide details of the taper plans, but instead repeated the Fed’s stance that “it could be appropriate to start reducing the pace of asset purchases this year.” — AFP




Source: Malay Mail

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