Fed chair Powell is speaking at an IMF panel discussing how vaccines can foster more inclusive growth, in which he has repeated the familiar line: namely that while there is a brighter outlook for the US economy from fiscal support and vaccines and monetary policy is still supportive, the recovery is unevent and millions of people still have a hard time finding their way back into the workforce.
Some other highlights from his remarks:
- Says the U.S. economy has thus far avoided a worst case scenario, but the recovery is ueven and incomplete
- The pandemic hit lower-income workers most, the Fed is very concerned
- We want to see a string of job reports like the March jobs report to see progress; there are still 8.5mln out of work
- Millions of people will have a hard time finding way back into workforce
- Substantial further progress means actual progress, wants to see actual improvement before tapering
- Global vaccination is a risk to progress we are making, there is a risk in the US as well with cases moving back up
- We are not going back to the same economy
- It will be appropriate to continue to support those who have a hard time getting back into the work force
- There is a risk to the recovery as cases move up in the U.S.
- Reiterates we need to keep supporting the economy, and we will
- The Fed will provide aid to the economy until It no longer needs it
- The Fed must see 'actual progress' on Fed goals to pare asset buying
Powell also touched on the most critical topic, inflation, reiterating that "one time increases in prices is different from persistent inflation" and that by inflation he means "persistent inflation that goes up year after year" adding that he "does not expect price increases from tight supply to be repeated year after year." Powell also reiterated that he sees upward pressure on prices to be transitory.
So what if inflation does emerge? Well then, to use the parlance of the Bernank, Powell said he has the tools to deal with inflation if needed (he did not say in 15 minutes), explaining that the traditional tool to deal with inflation is to raise rates. While we are a long way away from that, however, Powell will be monitoring inflation expectations closely.
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