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Fed's Powell Reiterates Policy To Remain Unchanged For 'Some Time'

jerome powell 112818 23feb21 lt

In a widely anticipated move, Federal Reserve Chair Jerome Powell on Tuesday told members of the Senate Banking Committee the central bank is likely to maintain ultra-easy monetary policy for the foreseeable future.

Powell's prepared remarks largely mirrored recent assessments, indicating interest rates will remain at near-zero levels and the Fed will continue its asset purchases at the current rate until "substantial further progress" has been made toward its goals of maximum employment and price stability.

"The economy is a long way from our employment and inflation goals, and it is likely to take some time for substantial further progress to be achieved," Powell said.

The comments from Powell come as recent concerns about the outlook for inflation have contributed to an increase in treasury yields, with the yields on ten-year notes and thirty-year bonds reaching their highest levels since the early days of the coronavirus pandemic.

Powell acknowledged that consumer prices have partially rebounded following the steep drop last spring but noted prices for sectors that have been most adversely affected by the pandemic remain "particularly soft."

The Fed chief said annual inflation remains below the central bank's 2 percent target and reiterated monetary policy is likely to remain unchanged until inflation is on track to moderately exceed 2 percent for "some time."

"While we should not underestimate the challenges we currently face, developments point to an improved outlook for later this year," Powell said. "In particular, ongoing progress in vaccinations should help speed the return to normal activities.

He added, "In the meantime, we should continue to follow the advice of health experts to observe social-distancing measures and wear masks."

Powell stressed that the Fed remains committed to using its full range of tools to support the economy and to help ensure the recovery will be as robust as possible.

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