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Epidemics

Fed Chair Jerome Powell Warns of Risks Amid Economic Growth

Strategic Insights

— 1 min read

Federal Reserve Chair Jerome Powell says the American economy "has brightened substantially" as more people are vaccinated and businesses reopen, but cautions that the crisis is not yet over and warns of risks from coronavirus flare-ups if Americans return to normal life too quickly. The Fed has held interest rates near zero since March 2020 and has been buying about $120 billion in government-backed bonds each month, policies meant to stoke spending by keeping borrowing cheap. Powell reiterated that the Fed will continue to support the economy until it is closer to its goals of maximum employment and stable inflation.

Key Takeaways:

  • The US economy is at an "inflection point" and on the cusp of growing more quickly, according to Fed Chair Jerome Powell.
  • The principal risk to the economy is the spread of the coronavirus again, with Powell warning that it's essential for people to continue socially distancing and wearing masks.
  • The Fed has held interest rates near zero since March 2020 and will continue to support the economy until it is closer to its goals of maximum employment and stable inflation.
  • The central bank will consider raising interest rates when the labor market recovery is complete, inflation is back to 2 percent, and on a path to exceed 2 percent for some time.
  • Powell wants to see "sustainable" price increases before adjusting monetary policy, with inflation currently below 2 percent.
  • The economy is recovering, with over 900,000 workers added to payrolls last month, but still missing millions of jobs compared to February 2020.
  • The pandemic has disproportionately affected lower-income service workers, who are heavily people of color and women, with many still struggling to get back to their jobs.

Statistics:

  • The Fed has been buying about $120 billion in government-backed bonds each month to stimulate spending.
  • The economy is missing millions of jobs compared with February 2020.
  • Employers added more than 900,000 workers to payrolls last month.
  • New state jobless claims climbed in the latest weekly report.
  • Inflation has been below 2 percent, with the Fed wanting to see it moderate above 2 percent before adjusting monetary policy.

Sources:

  • "60 Minutes" on CBS
  • Federal Reserve Chair Jerome Powell
  • The New York Times
  • Reuters

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