Powell Says Rates Are Likely to Stay Low for Years
It could be years before the central bank raises interest rates above a “low” level, Jerome H. Powell, the chair of the Federal Reserve, said on Friday, a sign of the Fed’s steadfast view that the economy, while slowly recovering, will need extraordinary support for an extended amount of time given the pandemic.
His comments, in an interview with NPR, were a contrast to those from the White House, which hailed Friday’s jobs report showing the unemployment rate dipping to 8.4 percent as a sign of a continued, rapid recovery from the depths of the pandemic recession.
“The economy is now recovering,” Mr. Powell said. “But it’s going to be a long time, we think. We think that the economy’s going to need low interest rates, which support economic activity, for an extended period of time. It will be measured in years.”
The Fed slashed interest rates to near zero in March and has increasingly suggested that it is in no rush to raise them, even if the unemployment rate drops and the labor market is running hot.
Last month, Mr. Powell announced a major shift in how the central bank guides the economy, signaling it would make job growth pre-eminent and would not raise interest rates to guard against expected inflation just because the unemployment rate is low.
“What we’ve learned is that unemployment can be even lower than we thought and not result in troubling levels of inflation,” Mr. Powell told NPR. Later, he added: “We’re not going to prematurely withdraw the support that we think the economy needs.”
While Mr. Powell expressed concern over the long-run sustainability of federal debt, which will nearly exceed the size of the economy this fiscal year, he said now is not the moment to worry about cutting spending and limiting borrowing. “The time to start working on fiscal sustainability is not right now when we have so many people in need,” he said.
Article source: https://www.nytimes.com/live/2020/09/04/business/stock-market-today-coronavirus