Powell "Expect Economic Recovery Within the Year... Maintain Zero Interest Rate"

"Asset Purchase Pace Maintained" to Soothe the Market

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] As US Treasury yields surged and financial markets became unstable, Jerome Powell, Chairman of the US Federal Reserve (Fed), sought to calm the market by stating that maintaining zero interest rates and early tapering (reduction of asset purchases) are not options. While emphasizing future uncertainties, Powell also suggested the possibility of economic normalization within the year.

Powell made these remarks on the 23rd (local time) during a hearing before the US Senate Banking Committee. Recently, there have been market concerns that inflation fears could spread amid expectations of economic recovery, raising the possibility that the Fed might seek an early exit strategy.

On this day, Powell reaffirmed his commitment to maintaining strong economic stimulus policies and focused on alleviating market anxiety. He stated, "The economic recovery is uneven and remains far from complete," adding, "The path ahead is highly uncertain."

He went on to say that asset purchases will continue at the current pace until further progress is made, noting, "The economic situation remains distant from our employment and inflation targets, and it will take time to achieve substantial additional progress."

He also emphasized the slowdown in employment improvement, with millions still unemployed, stating, "We will maintain zero interest rates until we reach full employment and inflation slightly exceeds the 2% target."

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