Fed's Powell says does not want to return to bad old days of inflation
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: