Fed says economy still has work to do
There’s been economic progress since the darkest days of the COVID-19 pandemic, according to the Federal Reserve, but not enough. Therefore, the Fed announced after a two-day meeting, interest rates will remain between 0 and 0.25%. More progress on inflation and employment needs to be made, Chairman Jerome Powell said Wednesday.
“Our approach here has been to be as transparent as we can. We have not reached substantial further progress yet,” he said. “We see ourselves having some ground to cover to get there.”
Inflation remains much higher than the 2% Powell told Congress is desirable, but the Fed continues to view that as a temporary consequence of sectors of the economy reopening at differing speeds.
“Inflation has risen, largely reflecting transitory factors. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses,” the Fed said in an unanimously approved statement.
A new wave of COVID fueled by the dominance of the delta variant is cause for concern but likely won’t result in widespread shutdowns like those of spring 2020.
“What we’ve seen is with successive waves of COVID over the past year and some months now, there has tended to be less in the way of economic implications from each wave,” Powell said.
“What’s happened is: First of all, people are vaccinated, they’re going on with their lives. Secondly, we’ve kind-of learned to live with it. A lot of industries have kind of improvised their way around it. Particularly, for example, buying a new home.”
The Fed will continue buying at least $120 billion worth of bonds monthly for the near future. Powell’s announcement helped stocks rebound somewhat after a bad start to the day. The Dow Jones still closed down 128 points, with the NASDAQ up 0.7%, and S&P 500 down slightly.
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