Fed chief signals US economy may be ready for less stimulus by year end
WASHINGTON: The US economy and labor market have healed to the point that the central bank could begin to withdraw its stimulus measures by the end of the year, Federal Reserve Chair Jerome Powell said Friday.
But the Fed chief stressed that there was no hurry to raise interest rates, arguing that current inflation pressures will be temporary. When Covid-19 hit the world’s largest economy last year, the Fed jumped into action to prevent a major recession, slashing the key lending rate to zero and buying huge amounts of Treasury debt and agency mortgage-backed securities to provide liquidity to the financial system.
The pandemic recession was “the briefest yet deepest on record,” Powell said in his highly anticipated speech to the annual Jackson Hole central banking symposium.
With millions of jobs recovered, he signaled that the Fed may ease the pace of bond buying from its…