Powell: Economic Recovery Needs Some Time

Chairman of the United States Federal Reserve, Jerome Powell, testified on Tuesday before the Senate, telling the Senate’s Banking Committee that the economy’s recovery is still uneven and far from complete.

Powell vowed to maintain the current monetary policy until the inflation target is achieved and full employment is reached.

“At the Federal Reserve, we are strongly committed to achieving the monetary policy goals that Congress has given us, maximum employment and price stability.”

“The economy is a long way from our employment and inflation goals, and it is likely to take some time for substantial further progress to be achieved.”

The Fed Chair noted that the central bank has taken “forceful actions to provide support and stability, to ensure that the recovery will be as strong as possible, and to limit lasting damage to households, businesses, and communities.”

“The path of the economy continues to depend significantly on the course of the virus and the measures undertaken to control its spread,” he added.

“Ongoing vaccinations offer hope for a return to more normal conditions later this year.”

In addition, Powell said that household spending on services remains low, but household spending on goods increased in January after moderating late last year, while the pace of improvement in the labor market has slowed.

“Inflation remains below our 2% longer-run objective.”

Furthermore, Powell pointed to the public review conducted last year of the Fed’s monetary policy strategy, tools, and communication practices.

He said that the Fed plans to keep the low interest rates until the labor market conditions have reached levels consistent with the maximum employment target and inflation has risen to 2% and is on track to moderately exceed this target for some time to achieve sustainability.

“We will continue to increase our holdings of Treasury securities and agency mortgage-backed securities at least at their current pace until substantial further progress has been made toward our goals.”

These policies have “materially eased financial conditions and are providing substantial support to the economy,” Powell noted.

“We are committed to using our full range of tools to support the economy and to help ensure that the recovery from this difficult period will be as robust as possible,” he concluded.