We are not out of the woods and it would be premature to declare victory, Powell says. It would be good to see vaccination rates at a substantially higher level. That can only help.
It’s so great to see the economy open again, and people living their lives again. It appears to be safe, but I’d encourage people to get vaccinated, the Fed chair concludes.
Powell: Don’t see troubling wage rises
Back on the labor market…. Jerome Powell says a ‘slew’ of retirements may have hit participation rates.
And on wages, he says pay is going up – that’s natural in a strong economy – but the Fed isn’t seeing anything “troubling”.
Namely, it’s not seeing wages at “unsustainable levels” across the economy, ahead of productivity and inflation, which are forcing firms to keep raising prices (this was the classic wage-price spiral that fuelled inflation in the past).
Instead, wage are high among new starters, many in low-skill jobs, Powell adds (reflecting the scramble to hire staff).
Supply and demand aren’t matched up well, but in a flexible economy this should resolve itself in the coming months, Powell continues.
There’s still a big group of unemployed people, he concludes, and the Fed haven’t forgotten them. And there’s every reason to think we’ll be in a strong labor market pretty quickly.
Jerome Powell is sounding somewhat dovish – insisting that the dot plot chart is not a great forecaster of future interest rate moves.
They are individual projections – they’re not a committee forecast, or a plan, the Fed chair insists during his press conference.
The Federal Reserve’s so-called dot plot, which the U.S. central bank uses to signal its outlook for the path of interest rates, shows that officials expect no change in policy this year, while leaning toward two rate increases by the end of 2023, based on median estimates.
The Fed on Wednesday kept its benchmark rate on hold for a 10th straight meeting after sweeping into emergency action amid the coronavirus pandemic in March of last year with a full percentage-point cut.
On the issue of when to taper the Fed’s bond-buying stimulus, Powell says this week’s meeting was the ‘talking about, talking about’ meeting — a term he’s now like to retire.
So the FOMC will continue to assess progress in the economy.
And it will be appropriate to consider a tapering plan at coming meeting, if the progress continues….. but he won’t lay our any numbers that would define the ‘substantial future progress’ the Fed is looking for.
Why hasn’t hiring been faster, given there are a record number of vacancies (over nine million)?
Jerome Powell says there are several factors — including a skills mismatch between the jobs available and the people looking for work; some people being reluctant to return to customer-facing roles due to Covid-19, and childcare responsibilities, which might ease once schools and childcare centres reopen in the fall.