The US central bank chair said that American economy recovery is still a long way
Federal Reserve chair Jerome Powell talks about how the path to recovery of the American economy can still be a long way, speaking to the press at the Federal Open Market Committee (FOMC) conference on Wednesday. The US central bank has also reported a not much modified interest rates, keeping it to near zero.
Almost Zero Levels
The lending rate of almost zero began since March, when the pandemic was beginning to hit different sectors due to restrictions. It is being maintained at the same level, “until we are confident that the economy has weathered recent events and is on track to achieve our maximum employment and price stability goals,” Powell said.
Recovery Depends on Response
The Fed chair further mentioned that the unemployment package has been providing significant help to household incomes. To him, the cash assistance to those who lost their jobs had greatly supported the economy’s stability. “It was fast, it was broad and appropriately so,” he said referring to the federal’s stimulus aid.
Around May, Powell noted that economic pickup was somehow felt by the reduction in unemployment rate, while consumer expenditures were also finding solid ground. However, with the resurgence of the virus giving new spikes in daily cases, the economic activity stalled once more. Industries are not going to recover without successfully gaining control over the virus.
“The path forward for the economy is extraordinarily uncertain and will depend in large part on our success in keeping the virus in check,” Powell said. To him, “Policy actions need to be taken at all levels,” since the economy was hit by a global crisis.
For the chair of the Fed, the slowing pace of the seriousness and stability of the recovery cannot be determined this early. Although he also reckoned that the economy’s rebound will be dependent on the coronavirus and the response for its spread.
He also shared that the central bank is not seeing any possible inflation yet. Many are expecting that national debt will further increase with dollar selling off over 4 percent and gold prices are reaching record highs, which would result to inflation.
Powell said, “Fundamentally, this is disinflationary shock… There’s a lot of discussion over how this might lead to inflation over time.”
He added, “We see core inflation dropping to one percent. I do think for some time we’re going to be struggling against disinflationary pressures rather than inflationary pressures.”