Federal Reserve Chairman Jerome Powell speaks during a House Select subcommittee on coronavirus crisis hearing in Washington, DC, the United States, Jan.
Stefani Reynolds | Reuters
Federal Reserve Chairman Jerome Powell said in a statement to be presented to Congress this week that the economy is growing but continues to face threats from the coronavirus pandemic.
The central bank governor also highlighted mounting inflationary pressures, which he expects to ease over time.
As the economy recovers from the pandemic, he continued to pledge support for the policies the Fed put in place in the early days of the Covid-19 threat.
“The economy has improved steadily since our last meeting,” Powell said in a comment he will submit to the House of Representatives subcommittee on the coronavirus crisis on Tuesday.
“The widespread vaccination, along with unprecedented monetary and fiscal measures, has been a major contributor to the recovery. Activity and employment indicators have continued to strengthen, and real GDP appears to be well on track this year to show its fastest increase in decades. “He added,” Much of this rapid growth reflects the continued recovery of activity from low levels. “
Although vaccines have dramatically slowed the pace at which the virus has spread in the country, he said the threats remain.
“The pandemic continues to pose risks to the economic outlook,” he said. “Progress in vaccination has limited the spread of COVID-19 and is likely to further reduce the economic impact of the public health crisis. However, the rate of vaccination has slowed and new strains of the virus remain a risk. “
The Fed has kept its short-term credit benchmark rate near zero and buys at least $ 120 billion worth of bonds every month.
However, last week’s Federal Open Market Committee meeting showed that members are looking ahead to when they will begin pulling back policy adjustments.
One concern is that inflation is rising the fastest since the financial crisis, forcing the Fed to hike rates faster than desired. Powell said price pressures had increased “noticeably” but reiterated his belief that once the special factors wear off, inflation will fall back to the Fed’s longer-term target of 2%.
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