The pandemic continues to threaten economic activity, Jerome Powell noted.
The level of recovery of the U.S. economy after the coronavirus pandemic is approaching the threshold beyond which it is possible to cancel support measures. Still, the surge in the spread of the delta variant of the coronavirus creates new risks. This was stated on Friday by the head of the U.S. Federal Reserve System (FRS), Jerome Powell, speaking at an economic symposium in Jackson Hole (Wyoming) in a virtual format.
“So far, I believe that our policy is correct. As always, we are ready to adjust it to achieve our goals,” he added.
“In July, I said that if the economy moves in the direction in which it is expected, then this year it will be possible to start reducing purchases of securities. The past months have brought even more progress, including on the labor market but also the spread of the coronavirus. We will carefully evaluate new data and emerging risks,” Powell added.
At the same time, the head of the Federal Reserve noted that, in general, positive trends are observed in the American economy and, according to available forecasts, they will continue in the coming months. “Shortly, we expect to receive data indicating that the balance of supply and demand is approaching normal indicators. We also expect new data on the stabilization of inflation, including in the areas of consumer goods and prices for services most affected by the pandemic. We also expect to see further growth in the labor market. We will also learn new details about the delta variant,” he said.
At the same time, Powell did not specify a specific time frame for curtailing support measures.
It was expected that during the symposium in Jackson Hole, Powell would name the dates, at least approximate, when the Fed would begin to cancel the course aimed at supporting the U.S. economy in the face of a pandemic. First of all, it was about reducing the volume of purchases of state treasury obligations, which allows us to keep the cost of borrowing at a low level, stimulates the growth of spending by enterprises and consumers, and accelerates inflation.