Powell: Fed Will Continue to Support Economy Until Recovery Is Complete
April 11 2021 - 6:31PM
Dow Jones News
By Paul Kiernan
Federal Reserve Chairman Jerome Powell said the U.S. economy
appears to be at an inflection point, with output and job growth
poised to accelerate in the months ahead as long as the Covid-19
pandemic retreats.
"We feel like we're at a place where the economy's about to
start growing much more quickly and job creation coming much more
quickly," Mr. Powell said in an interview to be broadcast Sunday
evening on CBS's "60 Minutes." He said the Fed's forecast is that
the economy could produce close to one million jobs a month for "a
string of months."
The central-bank chief urged Americans to continue socially
distancing and wearing masks, saying a resurgence of Covid-19
remains the primary risk to the economic outlook.
The U.S. seven-day average of newly reported Covid-19 cases has
been climbing in recent weeks after a steady, monthslong decline
following a deadly fall surge. Daily cases exceeded 75,000 on April
7, down from a peak of 300,000 in early January but higher than at
any point in the first six months of the pandemic.
President Biden and administration officials have also urged
Americans to be patient and take precautions as the rollout of
Covid-19 vaccines continues and new variants spread.
Still, with the vaccination campaign picking up speed, Fed
officials and private forecasters say the U.S. economy is
positioned for its fastest year of growth since the early 1980s.
Economists surveyed by The Wall Street Journal in recent days said
they expect economic output to expand 6.4% in 2021 and
private-sector payrolls to rise by 7.06 million.
Mr. Powell reiterated that the Fed plans to wait until the
economy's recovery is complete before it raises interest rates.
"It'll be a while until we get to that place," Mr. Powell said,
according to a transcript of the interview, which took place on
Wednesday. Asked whether a rate increase might happen this year,
Mr. Powell said it is "highly unlikely."
Mr. Powell and other Fed officials have indicated in recent
weeks that they expect to hold U.S. short-term interest rates near
zero through 2023. They also plan to continue the Fed's $120
billion of monthly bond purchases until the economy makes
"substantial further progress" toward its goals of maximum
employment and sustained, 2% inflation.
Inflation has remained below the Fed's target for most of the
past decade, while the U.S. labor market remains about 8.4 million
jobs short of its pre-pandemic level of employment.
Asked about Archegos Capital Management, an investment firm
whose implosion in recent weeks caused billions of dollars in
losses for banks, Mr. Powell said it didn't appear to raise
questions about the broader stability of the financial system. But
he indicated that the Fed might scrutinize whether banks adequately
understand the risks they incur.
"It was a risk management breakdown -- and one that we're
looking very carefully at to try to make sure it doesn't happen
again," Mr. Powell said. "So that is surprising and
concerning."
The Fed chairman also called for a reform of money-market mutual
funds, which required a bailout from the central bank in March 2020
amid deep market turmoil. It was the second time in 12 years the
Fed had to step in.
"There's a structural issue, and we know this," Mr. Powell said.
"When something's happened twice, it really is time to go ahead and
fix it. Every private business ought to have the ability to deal
with a range of plausible things that might happen to it."
Write to Paul Kiernan at paul.kiernan@wsj.com
(END) Dow Jones Newswires
April 11, 2021 19:16 ET (23:16 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.