2022年1月29日

Fed Chairman Colin Powell reiterated the easy-money policy and maintained the bond purchases

Fed Chairman Colin Powell said recently that he wants to maintain the current accommodative monetary policy until the US labor market reaches maximum employment and inflation rises to 2%.

Local time 23, the Federal Reserve website disclosed that Powell appeared in the Senate Banking Committee semi-annual monetary policy report hearing speech. As for the current state of the U.S. economy, Powell said economic progress remains largely dependent on the spread of the disease and the steps taken to contain it. While the ongoing vaccination campaign offers hope that the U.S. economy will return to more normal levels later this year, the recovery remains uneven and the path forward highly uncertain.

On jobs, Powell said millions of Americans are still out of work, despite great progress in the labor market since the spring. The US Labour market still has a long way to go to recover, with the country still 10 million jobs short of what it was before the outbreak.

On inflation, Powell noted that inflation remains below the 2 percent target. “While we should not underestimate the challenges now facing us, developments point to an improved outlook later in the year,” he said. “In particular, vaccination should help accelerate a return to normal economic activity.”

On monetary policy, Powell made it clear that he would seek to achieve an average inflation rate of 2 per cent over time. This implies that, after inflation has been consistently below 2 per cent, appropriate monetary policy is likely to aim for some time at a rate modestly above 2 per cent. With this change, the aim is to keep inflation expectations at the 2 per cent target in the long run.

Powell also mentioned the desire to maintain the current accommodative target for the federal funds rate until the labor market meets the Committee’s assessment of maximum employment and inflation rises to 2 percent, which is expected to be slightly above 2 percent for some time.

In addition, the Fed will continue to increase its holdings of Treasurys and agency mortgage-backed securities at at least the current pace until substantial progress is made toward its goals.

On digital currencies, Powell said the Fed is exploring whether it should issue digital dollars. “Digital currencies are a very high priority, but they pose significant technical and policy concerns and the Fed doesn’t need to lead other central banks,” he said. (Xin Xin Jingwei APP)

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