Powell’s presentation on the Two-Day Semi-Annual Monetary Policy Report began in the United States Congress.
Speaking to the United States Senate Committee on Banking, Housing, and Urban Affairs on the first day of the presentation, Powell emphasized that the Fed is highly committed to achieving the maximum goals of employment and price stability.
Affirming that they have taken firm measures to provide support and stability since the beginning of the new type of coronavirus epidemic (Kovid-19), to ensure that the recovery is as strong as possible and to limit the lasting effects of the epidemic on households, businesses and communities, Powell said, “The course of the economy significantly increases the course and spread of the virus. It continues to depend on the measures that are taken to control it.” found the evaluation.
Powell said the increase in Covid-19 cases causes great hardship for millions of Americans and puts pressure on economic activity and employment.
“VACCINES GIVE HOPE TO RETURN TO MORE NORMAL CONDITIONS LAST YEAR”
Noting that after the strong recovery in economic activity last summer, momentum slowed significantly and the worst-hit sectors weakened as the number of cases increased again, Powell said: “The number of hospitalizations with new cases has declined in recent weeks. and ongoing vaccines give hope of a return to more normal conditions later this year. However, the economic recovery remains uneven, far from complete and the way forward is quite uncertain. ” saying.
Powell reported that household spending remained low, particularly in service sectors that require people to come together, including entertainment and accommodation, while the housing sector made a full recovery and investment and production manufacturing increased.
“The overall recovery in economic activity since last spring is due in part to unprecedented fiscal and monetary action that has provided key support to many households, businesses and communities.” used the expression.
“INFLATION IS ALLOWED BELOW OUR LONG-TERM TARGET OF 2 PERCENT.”
Noting that the pace of recovery in the labor market slowed as in general economic activity, Powell said that labor market participation remained below pre-epidemic levels.
Powell emphasized that despite progress in the labor market since the spring, millions of Americans remain unemployed, adding that unemployment is most severe among low-wage workers and African Americans, Hispanics and other minority groups.
Noting that the epidemic also significantly affected inflation, Powell said that “consumer prices partially recovered during the rest of last year after the big drops in the spring. However, prices in some of the sectors most affected by the epidemic are particularly weak. falls low. “he spoke.
“Ongoing progress, especially in vaccination, should help speed the return to normal activities,” Powell said, noting that events indicate a better outlook later this year. saying.
Noting that they made some changes in monetary policy last year, Powell said they did not change the long-term inflation target of 2 percent and that they emphasized that maximum employment is a broad and inclusive target in terms of the employment target. “This change means that we will not only tighten monetary policy in response to a strong labor market,” Powell said. speak.
Regarding the goal of price stability, Powell affirmed that they will try to achieve an average inflation of 2 percent over time, which means that after periods of inflation below 2 percent, the appropriate monetary policy will aim to achieve inflation slightly above 2 percent for a time. .
Powell stated that they believe it would be appropriate to maintain the current federal funds rate support target range for a time, and that they will continue their bond purchases at least at the current rate until significant progress is made toward the bank’s targets.
Emphasizing that the increase in the Fed’s balance sheet significantly eased financial conditions and provided significant support to the economy with these purchases, Powell said: “It will probably take some time to make significant progress that is far from our economy.” employment and inflation targets. “the evaluation found.
“We are committed to using all of our tools to support the economy and ensure that the recovery in this difficult period is as robust as possible,” Powell said. saying.