The Federal Reserve will notify investors in advance of plans to withdraw emergency support for ecology, Fed Chairman Jerome Powell said Thursday.
“We will be gradual over time and with great clarity when the economy is almost over, we will withdraw our support in times of crisis,” said Powell, in a rare interview. , on National Public Radio.
The Fed pushed its policy interest rate to zero last spring and has purchased $ 120 billion of Treasurys and mortgage-related funds to support the economy during a coronavirus pandemic.
“As the economy recovers – and we have guided the public on this – as we make further progress towards our goals, we will gradually bring back what we have. Treasurys and mortgage-backed securities we buy, ”said Powell.
“And then in the long run, we’ve put in place a test to allow us to raise interest rates,” Powell said.
Economists believe that the Fed is working hard to pull back all monetary incentives even if it is obvious.
“Thanksgiving is going to be very difficult, even if the Fed goes ahead and manages this long in advance,” said Megan Greene, a Fellow of Harvard University.
“It represents a binary movement so I don’t see the Fed being able to tap without rolling the markets,” she said.
The markets were rolled in 2013 and 2014 as Fed’s standard policy following the 2008 financial crisis.
The Fed has expected that the first flat rate hike will not happen until sometime after 2023 but markets are raising prices by the end of 2022.
When asked if he was “scared” of the amount of money the Fed has pumped into the economy, Powell said that the amount of money in determining inflation is less important than before. seo.
If inflation appears to be above the Fed’s 2% target, the central bank will use its tools to push inflation back to the target, Powell said.
The Fed chairman said the US federal government’s deficit is on an “unsustainable path” and needs to be addressed once the economy recovers.
“But that time is no longer over,” he said.
DJIA Stock,
COMP,
lower opening on Thursday even as the recent rise in TMUBMUSD10Y 10-year Treasury notes,
cooled off.