Federal Reserve says it will continue to shore up the economy even if signs improve

The Federal Reserve has said that it will continue on its course to bolster the US economy even if the vaccination roll out and economic growth forecast appears to be promising.

Speaking yesterday (Tuesday) the Fed Governor Lael Brainard said that even if the modal outlook seems more positive, the Fed must remain ‘patient’ and continue with its fiscal support measures for the foreseeable future.

She said, “Vaccinations, along with enacted and expected fiscal measures and accommodative monetary policy, point to a strong modal outlook for 2021. Various measures of financial conditions are broadly accommodative relative to historical levels and should remain so. The labour market should strengthen, perhaps significantly, as the virus recedes, social distancing comes to an end, and the service sector springs back to life.”

While there may appear to be movement towards the inflation target later this spring, the director said that wouldn’t be sufficient to give the Fed confidence that the economy had recovered from the hit it has endured due to the pandemic. She explained that a, “a sustained improvement in actual inflation …” would be needed, noting that “The past decade of underperformance on our inflation target highlights that reaching 2% inflation will require patience.”

It has been suggested that the near zero interest rate could be required for a period of several more years – something which is great long term news for the strength of gold.

Like this article?

Share on facebook
Share on Facebook
Share on twitter
Share on Twitter
Share on linkedin
Share on Linkdin
Share on pinterest
Share on Pinterest