“Fed actions will continue to bolster the US economy as it battles the VirusCasedemic” — Paul Ebeling
“Monetary policy will continue to deliver powerful support to the economy until the recovery is complete,” Chairman Powell told the Senate Banking Committee Tuesday and the House Financial Services Committee Wednesday in his bi-annual report to Congress.
The Fed will hold interest rates near Zero at least through Y 2023 and will keep buying bonds at a monthly pace of $120-B until “significant further progress” had been made on employment and inflation.
The Fed said data show a pickup in employment through early February in the hard-hit leisure and hospitality sector, which includes restaurants, entertainment venues, and hotels. But services spending remains restrained, the report said.
The Fed noted that job losses in the virus chaos have fallen disproportionately on low-income workers, those without a college degree, black and brown Americans and working mothers. These groups still have the most ground left to make up.
Americans managed to save even during the crisis, bringing the aggregate savings rate to more than 13% in Q-4 of Y 2020 almost 2X its level from Y 2019 brought on by government aid/relief/stimulus.
“These aggregate figures mask important variation across households, and many low-income households, especially those whose earnings declined as a result of the pandemic and recession, have seen their finances stretched,” the Fed said in its published report.
The Fed has re-framed its monetary policy to make an explicit commitment not to raise interest rates prematurely as unemployment falls, in order to ensure the recovery reaches the broadest number of people as possible.
“Tightening monetary policy in the absence of evidence of excessive inflation pressures may result in an unwarranted loss of opportunity for many Americans, whereas if an undue increase in inflation were to arise, policy makers would have the tools to address such an increase,” the report noted.
Accordingly to economist and political guru Bruce WD Barren, “the Fed has no choice but to throw its full support into the economic recovery. The last Presidential Era shows that Fed support must be there in order to sustain our economic progress to date.
“Cost of money and money supply are critical to sustaining the positive recovery information that is being evidenced, especially in retail and real estate. Hopefully, the White House plus Congress recognize this too.”
Have a healthy weekend, Keep the Faith!
Fed Committed to Bolstering Economy added by Paul Ebeling on
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