Federal Reserve Chairman Jerome Powell
Kevin Lamarque | Reuters
Despite what he sees as a rapidly recovering economy, Federal Reserve Chairman Jerome Powell has reaffirmed the central bank’s commitment to keep loose monetary policy in place.
That includes a statement of near-certainty that interest rates won’t be going anywhere as inflation remains tame and millions of Americans remain in need of assistance as the nation rebuilds from the damage caused by the Covid-19 pandemic.
“I think it’s highly unlikely that we would raise rates anything like this year,” Powell told CBS “60 Minutes” journalist Scott Pelley in an interview broadcast Sunday evening.
“I’m in a position to guarantee that the Fed will do everything we can to support the economy for as long as it takes to complete the recovery.”
That support includes near-zero short-term borrowing rates and $120 billion a month in bond purchases put in place following a sharp rebound from the plunge in activity between February and April 2020.
Though the economy has recovered more than 13 million jobs since the depths of the crisis, there remain about 9 million more still sidelined. As states and localities have loosened restrictions, more people have gone back to work.
But Powell said more needs to be done, particularly for those in the lower income brackets who have suffered the most.
“We don’t have the answer to everything, but the job that we do for the benefit of the public is incredibly important, and we do understand that if we get things right, we can really help people,” he said. “If the people who are at the margins of the economy are doing well, then the rest of it will take care of itself.”
In their most recent economic projections, Fed officials saw GDP rising in 2021 by 6.5%, which would be the fastest growth rate since 1984.
“We and a lot of private sector forecasters see strong growth and strong job creation starting right now,” Powell said. “Really, the outlook has brightened substantially.”
That doesn’t mean there are not substantial risks.
Powell said he worries about rising Covid cases and said people should continue to wear masks and physically distance to keep the recovery going. While he said he does not worry about financial system stability, he is concerned about ongoing cyberattacks that one day could cause serious damage.
One thing he’s not worried about is inflation, which is running around 1.6% now and remains well below the Fed 2% target. The central bank has pledged to keep rates low even if inflation would run somewhat above the target rate for a period of time.
When it comes to inflation, Powell said he would “like to see it on track to move moderately above 2% for some time. When we get that, that’s when we’ll raise rates.”
Correction: The interview aired Sunday but it was conducted Wednesday.
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