‘Rates to stay low for however long it takes’

Fed’s Powell says central bank to keep its foot on monetary policy gas pedal for years

WASHINGTON:

Federal Reserve Chair Jerome Powell on Friday said the US jobs report for August was “a good one,” but noted that with gains likely to slow, the central bank is planning to keep its foot on the monetary policy gas pedal for years.

“We do think it will get harder from here - because of those areas of the economy that are so directly affected by the pandemic still,” Powell told National Public Radio in an interview, referring particularly to sectors like leisure, hospitality, travel and entertainment that depend on large gatherings made unsafe by the virus.

Even as US employers added 1.37 million jobs last month, the total number of jobs regained since the crisis has only been about half the total lost, leaving millions still out of work.

“We think that the economy’s going to need low interest rates, which support economic activity, for an extended period...it will be measured in years,” Powell said. “However long it takes, we’re going to be there.”

The unemployment rate in August fell to 8.4% from 10.2% in July, and is lower now than most Fed officials had expected it would be by the end of the year.

Fed policymakers release fresh forecasts at their next policy meeting, slated for mid-September. Powell’s remarks are the last public comments from any US central banker until then. The Fed slashed rates to near zero in March and has rolled out a raft of lending programs to support businesses and households.

Published in The Express Tribune, September 6^th, 2020.

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