January 18, 2021 — Fed Chairman Powell Addresses Policies


The Fed lowered short-term interest rates to near zero last year and expects to keep them at that level for years.  It has also been buying $80 billion of treasury securities and $40 billion of mortgage bonds every month since June, and is committed to doing so until “substantial further progress” is seen in the job market.

The Jobs report Friday showed the US lost 140,000 positions in December, which means the US is a long way from a strong job market. This thought was brought up by Jerome Powell Thursday in a webcast with Princeton University.  He said now is not the time to be talking about exiting easy-money policies, and the economy is far from the Fed goals of lower unemployment and a sustained 2 percent inflation target. The Fed’s aim is to encourage borrowing, spending and investment.  Powell hopes a strong fiscal policy will allow the economy to recover faster than after the 2007-2009 crisis, when he says fiscal policy was tightened too fast.

A Wall Street Journal survey of forecasters in January projected the US economy will grow 4.3 percent in 2021 and the unemployment rate will fall from the current 6.7 percent to 5.3 percent by year end.