US economy at 'inflection point', says Fed chair

'We feel like we're at a place where the economy is about to start growing much more quickly', Jerome Powell says

Federal Reserve chair Jerome Powell appears before the Senate Banking Committee in December. Mr Powell's four-year term as chair is due to expire in February next year. Reuters
Federal Reserve chair Jerome Powell appears before the Senate Banking Committee in December. Mr Powell's four-year term as chair is due to expire in February next year. Reuters

(Bloomberg) -- Federal Reserve Chair Jerome Powell said the U.S. economy was at an “inflection point” with stronger growth and hiring ahead thanks to rising vaccinations and powerful policy support, but that Covid-19 remains a threat.

“We feel like we’re at a place where the economy is about to start growing much more quickly and job creation coming in much more quickly,” Mr Powell told CBS’s 60 Minutes in an interview conducted on Wednesday.

A short segment of the interview was shown during the network’s Face the Nation show on Sunday. The complete interview will air later in the day.

“The principal risk to our economy right now really is that the disease would spread again. It’s going to be smart if people could continue to socially distance and wear masks,” Mr Powell said.

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. That dovish view has helped power US stocks to record highs as investors shrug off inflation concerns amid powerful aid from Washington.

“What we’re seeing now is really an economy that seems to be at an inflection point. And that’s because of widespread vaccination and strong fiscal support, strong monetary policy support,” Mr Powell said.

Minutes of the central bank’s March meeting released on April 7 said policy makers expect it will likely be “some time until substantial further progress” was made on employment and inflation. That refers to the tests they’ve set for scaling back bond purchases of $120 billion a month.

Their 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.

Mr Powell was put on the Fed board by President Barack Obama, a Democrat, and elevated to the central bank’s helm by his successor Donald Trump, a Republican. His four-year term as chair expires in February and he’s given no indication that he wouldn’t serve a second stint if asked by Democratic President Joe Biden.

Mr Powell, 68, has repeatedly deflected questions over whether he’d like to stay in the job.

Mr Biden, whose team could start considering the choice of Fed chair in the coming months, said last week that he’d not spoken to Mr Powell since becoming president out of respect for the Fed’s independence.

Mr Trump repeatedly applied public pressure on Powell and the Fed via Twitter and in speeches, drawing rebukes from around the world for interfering with the world’s most powerful monetary authority.

Published: April 12, 2021 08:00 AM

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