Powell “Tapering and interest rate hike still…exit strategy carefully”… US Fed reaffirms quantitative easing policy

Jerome Powell, chairman of the Federal Reserve System (Fed), reaffirmed the position that the Fed’s stimulus policy has not changed in the current situation. On the 14th (local time), Chairman Powell said, “Now is not the time to talk about the exit strategy. If the time to raise interest rates comes, we will certainly do that, but the time is not very close.”

Powell, who participated in an online conversation hosted by his alma mater, Princeton University, recently dismissed some prospects that the Fed could taper (gradual reduction in quantitative easing) and raise interest rates within the year.

“The current economic situation is far from our (Fed) goals, and the Fed will use monetary policy tools until the mission (the economic recovery) is definitely finished,” said Powell, dismissing market anxiety.

He dismissed the concern by interpreting the recent fall in the U.S. unemployment rate as an advance warning of inflation (increased inflation) by interpreting that “unless inflation or other imbalances appear, there will be no reason to raise interest rates.”

Regarding inflation concerns, Powell added, “Flexible average inflation targets mean that they are not bound by mathematical formulas,” and “I hope that expected inflation will settle at 2%.”

“If inflation figures move in an unwelcome direction, the Fed has the tools to fix it,” he added. “The Fed does not feel pressured by financial dominance.”

In particular, Chairman Powell said, “Another lesson of the global financial crisis is to be cautious rather than looking for an exit too soon.” Promised.

In addition to the rapid rebound in the recent 10-year U.S. Treasury bond rate, the Fed saw a possible taper within this year by at least four senior governors, including Fed President Rafael Bostik Atlanta Federal Reserve Bank (Yeon-eun) and St. Concerns spread that it could reduce asset purchases sooner than expected.

Prior to the event, Fed director Rayal Brainerd also drew a line on the possibility of early taper, saying, “The current level of asset purchase will be appropriate for a considerable period of time.”

In this regard, Bloomberg said, “Chairman Powell certainly does not seem to be in a hurry to reduce quantitative easing.”

After the Corona 19 crisis, the Fed plans to maintain a quantitative easing monetary policy such as zero interest rates and government bond purchases until it achieves sufficient employment and economic recovery targets. Currently, the Fed’s asset purchases include US government bonds and mortgage securities (MBS) worth $120 billion.

In particular, Chairman Powell’s remarks on the day can be interpreted as reaffirming the opinion of the Federal Open Markets Commission (FOMC) last month that it will not place a time limit on tapering.

In a statement last December, the FOMC said in a statement that the economic recovery will continue to buy bonds until there is “substantial further progress” and that it will tolerate a certain level even if inflation follows in the process of economic recovery and job market revitalization. I also sent.