The chairman of the Federal Reserve, Jerome Powell, spoke up amid concerns about inflation during a press conference on Wednesday, stating that things could be worse than originally expected, and that the “generous unemployment benefits” have contributed to unemployment.
“As the reopening continues, bottlenecks, hiring difficulties, and other constraints could continue to limit how quickly supply can adjust, raising the possibility that inflation could turn out to be higher and more persistent than we expected,” Powell stated. “Our new framework for monetary policy emphasizes the importance of having well-anchored inflation expectations, both to foster price stability and to enhance our ability to promote our broad-based and inclusive maximum employment goal.”
Powell also noted that “generous unemployment benefits” are one of the main factors that have kept Americans from seeking jobs, according to FXStreet.
The Hill reports that Powell spoke to reporters after the Fed’s Federal Open Market Committee (FOMC) announced it would keep interest rates at a 0.00 to 0.25 per cent baseline range, and continue to make monthly purchases of at least $80 billion in Treasury bonds and $40 billion in mortgage-backed securities, as expected.
The publication reported:
The FOMC did, however, note that “the economy has made progress” toward the Fed’s goals of maximum employment and inflation on track to be slightly higher than 2 percent annually.
While the U.S. remains more than 6.8 million jobs below its February 2020 peak, inflation has risen to an annual rate of more than 5 percent — well above the Fed’s target — largely due to supply disruptions and kinks related to the reopening of the economy.
The Fed chairman’s remarks come amid news that President Joe Biden is struggling to push his “Build Back Better” infrastructure plan, as only 45 per cent of Americans believe that the economy is currently in good shape, according to an Associated Press-NORC Center for Public Affairs Research poll. Some 54 per cent of Americans say that the economy is in poor shape.
Fewer than half, 45%, judge the economy to be in good shape, while 54% say it’s in poor shape. Views are similar to what they were in AP-NORC polls in June and in March, despite increases in vaccinations and the flow of aid from Biden’s $1.9 trillion coronavirus relief package. The results suggest that Americans not only filter their thoughts about the economy through their politics but also see uncertainty as the country is still 6.8 million jobs below pre-pandemic levels.
Other issues Powell touched upon were discussed by economic commentators and journalists on social media: