▲ Jerome Powell’s Federal Reserve System (Fed Chairman Jerome Powell attends a hearing on the Senate Financial Services Commission at the Washington DC Capitol on December 1 of last year and testifies. Washington/Reuters
Jerome Powell, chairman of the US Federal Reserve System (Fed), reaffirmed his intention to maintain low interest rates and continue asset purchases to recover the economy, saying that the US labor market is in a difficult state until a full recovery.
Powell said in an online seminar at the New York Economy Club on the 10th (local time), “It has been far from reaching the level that the labor market has been solid enough for the overall benefits to benefit all.” “We need this,” Bloomberg reported.
Chairman Powell stressed that in order for the economy to recover enough for low-wage workers to get jobs, they need to implement a patient and compliant monetary policy.
His remarks on this day were interpreted as’pigeons’ related to monetary policy. The Wall Street Journal of the United States (WSJ) assessed that Powell’s remarks made it clear that the Fed would not raise interest rates or reduce asset purchases (cutting bond purchases) for some time.
Regarding the labor market, he repeatedly warned, “Prolonging the unemployment situation not only negatively affects the lives of citizens, but also erode economic productivity. It takes a long time to reverse such negative effects.” As of January, the unemployment rate in the United States was 6.3%. However, Powell predicted that a more detailed measurement would reach about 10%. In particular, they pointed out that as inequality increases due to Corona 19, it is causing a greater blow to women and low-income families.
In addition, Chairman Powell said that monetary policy alone is not enough for economic recovery, and ordered the government’s aggressive fiscal policy. “The government and the private sector must join forces to contribute,” he said. “Workers and families suffering after the coronavirus outbreak need help, and many small businesses also need help.”
Mr. Powell’s remarks on that day are calling for a $1.9 trillion corona19 stimulus package promoted by US President Joe Biden, Bloomberg analyzed. Democratic Senator Ron Weiden said that day, “Chairman Powell’s remarks are to underline the need for the most powerful Corona 19 package possible.” However, the current massive stimulus package promoted by President Biden is facing opposition from the Republican Party.