Fed Chair Says It May Soon Be Time To Start Reducing Its Massive Economic Support

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Federal Reserve Board Chairman Jerome Powell testifies before a House Oversight and Reform Select Subcommittee hearing on Capitol Hill in Washington, D.C., on June 22. Powell said on Aug. 27 the economic recovery continues, signaling it may soon be time to start removing some of the massive support it’s providing to the economy.

Saul Loeb/POOL/AFP via Getty Images


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Saul Loeb/POOL/AFP via Getty Images


Economy
Jerome Powell: Economy Is Better Thanks To ‘Dunkirk’-Like Rescue By Fed, Congress

Powell’s speech comes as he and other policymakers are trying to decide when the Fed should start to phase out its aggressive bond-buying program.

The central bank has been buying at least $120 billion worth of Treasury and mortgage-backed securities every month in an effort to prop up the economy by keeping borrowing costs low.

At their last meeting in July, policymakers said the job market was not yet strong enough to slow those purchases, but most thought it could be later this year.

In his speech, Powell reaffirmed that timetable without providing specifics, but said policymakers will continue to monitor evolving risks.

Investors seemed to welcome the Fed chairman’s cautious approach. Stock indexes rose during the speech, with the Dow Jones Industrial Average up more than 200 points mid-morning.


Business
It’s Called The Bond Taper. Yes, It’s Geeky. But This Is Why You Should Know About It

The labor market is roaring back…

Employers have been on a hiring spree, adding nearly 1.9 million jobs in June and July. But the U.S. has yet to replace about 25% of the jobs that were lost in the early months of the pandemic. And millions of people who left the workforce during that period have yet to return, prompting employers to complain about a labor shortage.

Many forecasters hope to see a jump in job applicants this fall, as children go back to school and supplemental unemployment benefits run out across the country. But the surge in new coronavirus infections tied to the delta variant has put that optimistic outlook in doubt.

«While the Delta variant presents a near-term risk, the prospects are good for continued progress toward maximum employment,» Powell said.


National
The Topic Of Masks In Schools Is Polarizing Some Parents To The Point Of Violence

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A man walks by a «Now Hiring» sign outside a store on Aug. 16 in Arlington, Virginia. Fed Chairman Jerome Powell touted the recovery of the job market in a speech on Aug. 27, but noted more progress needs to be made to return to full employment.

Olivier Douliery/AFP via Getty Images


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Olivier Douliery/AFP via Getty Images


Politics
Inflation Is A Big Political Test For President Biden’s Economic Agenda

Many economists agree that inflation is unlikely to spiral out of control as it did in the 1970s. But others caution that even a «temporary» spike in inflation may last longer than is comfortable.

«Our sense is that supply-chain bottlenecks [and] the pressure on labor are going to make inflation a little bit more persistent than what the Fed has been counting on,» Wells Fargo economist Mark Vitner said this week.

Powell’s term leading the central bank is set to expire in February. Some progressive lawmakers want President Biden to replace Powell, but Bloomberg reported last week that Treasury Secretary Janet Yellen believes the Fed chairman deserves a second term.

Yellen herself was Fed chair, until then President Trump tapped Powell to replace her.

  • CPI
  • coronavirus pandemic
  • Jerome Powell
  • U.S. economy
  • inflation
  • Federal Reserve

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