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Home / Industry / Banking /  Jerome Powell vows to get US back to a 'great economy', plays down inflation

Jerome Powell pledged to get the U.S. back to a “great economy" and invoked a homeless encampment in downtown Washington to make the point that the recovery remains incomplete.

Playing down the risk that inflation could get out of control as the pandemic recedes, the Federal Reserve chair told a virtual panel Thursday that his commute home takes him past a “substantial tent city," and that he thought of the millions of Americans who are still trying to get back to work.

“So we just need to keep reminding ourselves that even though some parts of the economy are just doing great, there’s a very large group of people who are not," he said during the International Monetary Fund panel. “I really want to finish the job and get back to a great economy."

Stocks climbed as Jerome Powell said the central bank has the tools to curb any inflation pressures, which are expected to be temporary. The S&P 500 headed toward another record while the yield on 10-year Treasuries slid four basis points to 1.63%.

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.

Noting that there were nine or 10 million fewer Americans now working compared with February 2020 before the pandemic struck, Powell said that the central bank would not leave them behind.

“We will not forget those people and we’ll provide the economy the support that it needs until that job is done."

‘Some Time’

Minutes of their March meeting released Wednesday said policy makers expect it will likely be “some time until substantial further progress" is made on employment and inflation. That refers to the tests they’ve set for scaling back bond purchases of $120 billion a month.

Responding to a question about inflation and what would trigger Fed action, Powell said that while price pressures were expected to rise as the economy reopens, this was expected to be temporary and if it looked to be longer lasting, the Fed would take steps.

“We would be monitoring inflation expectations very carefully. If we see them moving persistently and materially above levels we’re comfortable with, then we’d react to that."

The Fed’s 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. Inflation was projected to end this year at 2.4% before settling back at the Fed’s 2% goal in 2022.

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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