Further headlines are crossing from Federal Reserve Chair Powell interview on US TV show 60 Minutes
Adam had this news earlier from the interview:
Further now, Headlines via Reuters:
- reopening too quickly a 'principal risk' to recovery
- Fed will support economy until recovery is complete
- in assessing progress wants to see labor force participation moving back up
- Fed does not want inflation to go materially above 2% and return to the 'bad, old inflation days'
- does want inflation 'moderately' above 2% for some time
- does not appear the case now that large federal deficits cause inflation
- some parts of the country more than fully recovered, but real disparities exist
- lower wage workers who lost jobs should be able to return to them 'much faster now'
- for many people, the covid recession is over but for millions of others it is not and 'we're going to keep those people in mind'
- economic recovery has been 'better, consistently better than I'd expected', helped by support from congress and the Fed
- with vaccinations 'you're seeing the resumption of what appears to be a very strong expansion'
- asked if he feared the US a year ago was looking at a great depression scenario, says 'I never really thought that was a likely outcome'
- would have been 'shocked' if told this time last year that more than 550,000 Americans would die of covid
- some asset prices are elevated by some historical metrics
- fed can't predict asset bubbles, more focused on resiliency of system if shocks occur
- believes financial system has wherewithal to stand significant shock to markets
- 'very low' chance of a repeat of the 2008 financial crisis
- 'most parts of the financial system made it through quite a stress test' in last year's economy collapse
- monitoring situation with Archegos 'very carefully,' does not seem to raise issues around stability of the financial system or the institutions involved
- is concerning that a single client could cause such large losses, suggest 'significant shortfall' in understanding of risks
- fed working hard studying digital currency, but no decision yet
- possible digital currency could be a benefit, but involves 'subtle, complex' set of questions
Bolding above is mine. Powell's Fed has promised inflation will be allowed to rise above 2%, actual and not just the forecast, which indicates a looser attitude than in the past. The market is pricing hikes sooner than the Fed is indicating but BoA say tightening could be sharper than expected, as posted earlier:
