Jerome H. Powell, chair of the Federal Reserve, said the central bank remained far from dialing back support for the economy.
By Jeanna Smialek
With the incoming Biden administration pushing for more economic stimulus and with multiple coronavirus vaccines already approved, some investors have been wondering whether the Federal Reserve might soon start to ease off its support for the economy.
Jerome H. Powell, the central bank’s chair, made it clear on Thursday that the central bank would be cautious in doing so — and that action was anything but imminent. During a webcast question-and-answer session, Mr. Powell said it would take time for the economy to recover from the pain of the pandemic era.
“When the time comes to raise interest rates, we will certainly do that,” he said. “And that time, by the way, is no time soon.”
Currently, dire short-term conditions — surging virus deaths, high unemployment, and partial state and local economic lockdowns — contrast sharply with the longer-term outlook. Economists think that the economy might come roaring back later in 2021 as vaccines allow normal life to resume and consumers spend money they saved during the pandemic.
That split has led some investors to worry that the Fed might speed up its plans to reduce the pace of its enormous bond purchases, or even to lift interest rates from the near-zero setting that has been in place since March. The central bank has been buying about $120 billion in Treasury and mortgage-backed debt per month to keep markets operating smoothly and to help goose the economy.
“We’ll let the world know” when it’s time to discuss plans for slowing purchases, Mr. Powell said, and that will happen only when it’s clear that they are well on their way toward their economic goals.
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