Powell "Maintaining Low Interest Rates... No Inflation Concerns"

"Will Maintain Bond Purchases"
Dismisses Inflation Concerns as US Treasury Yields Fall

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), reaffirmed his stance on maintaining low interest rates and continuing asset purchases to support economic recovery. He dismissed concerns in the market about a sharp rise in inflation as unlikely.

The Wall Street Journal (WSJ) reported on the 10th (local time) that Chairman Powell mentioned in an online seminar hosted by the New York Economic Club that the labor market is still suffering from the impact of the COVID-19 pandemic.

Powell emphasized that a patient and accommodative monetary policy is necessary for the economy to recover enough for low-wage workers to find jobs.

WSJ explained that Powell’s remarks made it clear that the Fed will not raise interest rates or begin tapering (reducing bond purchases) for some time.

Powell stated that monetary policy alone is not enough for economic recovery and called for active fiscal policy from the government.

He added, "Workers and households suffering since the COVID-19 pandemic need help, and many small businesses also need support," expressing support for the Biden administration’s $1.9 trillion stimulus package.

Powell also ruled out the possibility of inflation. He stressed, "Do not expect rapid or long-term inflation."

He said, "Wages and employment are recovering without inflation," and added, "In the past, the Fed responded to falling unemployment with interest rate hikes, but now it cannot do so."

Following Powell’s remarks, U.S. Treasury yields weakened. The 10-year Treasury yield fell by 0.033 percentage points from the previous day to 1.124%.

The January core consumer price index, which was announced at 0%, was also interpreted as a factor that pulled down bond yields.

This content was produced with the assistance of AI translation services.