There is no reason to hurry with the tightening of monetary policy. The Federal Reserve will continue to support the economic recovery of the United States. The goal is full employment.
These are the main messages of the long-awaited speech of US Federal Reserve Governor Jerome Powell. He spoke on Friday at the annual meeting of the world’s central bankers, which usually takes place in Jackson Hole, Wyoming. However, due to coronavirus, the meeting was held online.
Jerome Powell stressed that the high inflation facing the US is still considered temporary by the Fed and that it is important now to heal the economy affected by the coronavirus pandemic. Powell sees continued employment growth as a condition for curbing quantitative easing of $ 120 billion a month in securities purchases. In such a case, the so-called tapering could take place this year.
Analysts see Powell’s speech as encouraging as markets have raised fears that the Fed will take action against high inflation. According to them, the key data will be from the American labor market. If unemployment turns out to fall dramatically, they expect a decision by the Fed to limit bond purchases by the Fed in September.