an> said: “Even if the Fed starts to reduce the’quantitative easing’ policy so early, it will be very tricky.” She also said: “This represents a double transformation, so I think it is impossible for the Fed to be able to not shock the market. Under the circumstances, reduce the scale of asset purchases.”
In 2013 and 2014, as the Federal Reserve normalized its policy after the 2008 financial crisis, the market experienced turmoil. The Fed expects that the bank will not raise interest rates for the first time until sometime after 2023, but the market expects the bank to raise interest rates by the end of 2022.
When asked if he was “feared” about the amount of money the Fed injected into the economy, Powell said that the amount of capital injected is not as important as it used to be in determining inflation.
Powell said that if the inflation rate is ultimately higher than the Fed’s 2% target, the Fed will use its policy tools to bring the inflation rate back to the target.
2. Satisfied with the Fed’s crisis response
At the same time, Powell was basically satisfied with the Fed’s rapid response a year after the new crown virus epidemic caused the US economy to fall into the worst crisis since the “Great Depression” period.
“I compare it to Dunkirk.” Powell said, referring to the emergency rescue of the British and Allied forces from France during World War II. “At that time, it was time to get on the boat to save people, not to check records or the like. Just get on the boat and drive away.”
Last spring, as the financial market fell into a state of free fall, the Fed quickly mobilized its emergency lending capacity and injected trillions of dollars into the US economy. With this support, the bond market quickly stabilized; a year later, the stock market hit a record high.
Powell also praised the US Congress for providing trillions of dollars in support to troubled families and businesses. He said: “The financial support for the U.S. economy has reached the highest level in history, which will lead to an increase in economic activity and employment.”
Twelve months after the U.S. Congress passed the first of a series of pandemic relief bills, the U.S. economy is still not healthy enough, but it is on a clear path to recovery. Last week, the Federal Reserve issued a new and improved forecast, predicting that the U.S. economy will grow by 6.5% this year, which will be the fastest growth rate in nearly 40 years. In addition, the Fed also predicts that the unemployment rate will drop to 4.5% before the end of the year.
Powell stated that this proves both the positive effects of fiscal measures and the prospects for public health”text-remarks” label=”Remarks”>This article is from WeChat official account:Tencent Finance (ID: financeapp) author: Tencent stocks