Fed"s Powell sees easy monetary policy likely needed for some time
NEW YORK (Reuters) - The Federal Reserve's easy monetary policy will likely be warranted for "quite some time" as the U.S. central bank drives down high unemployment while nudging low inflation back toward target, a senior Fed official said on Tuesday.
Fed Board Governor Jerome Powell, in a speech to mark the appointment of a new head of the German Bundesbank's representative office in New York, touched on a range of issues, including the U.S. budget, banking supervision and monetary policy.
"And as our economy has gradually improved, it has become possible, and appropriate, for the Federal Reserve to provide clearer guidance on the path of monetary policy," Powell said in prepared remarks. "In all likelihood, this path will involve continued support from accommodative monetary policy for quite some time."
The Fed has laid out a timetable to start scaling back its $85 billion in monthly purchases of U.S. Treasuries and mortgage-backed securities later this year, provided the economy grows as expected. It expects the program will end around mid-2014, by which time the jobless rate is forecast to have fallen to 7 percent. U.S. unemployment in May stood at 7.6 percent.
Fed officials, following sharp swings in financial markets in response to the timetable on asset purchases, have gone out of their way to stress that scaling back bond purchases does not amount to tightening monetary policy, because the size of the central bank's balance sheet will continue to expand. Powell hewed to that message.
"The case for continued support for our economy from monetary policy remains strong," he said, noting that unemployment was still too high and inflation remains under the Fed's 2 percent goal, although he expected it to gradually move higher.
- Exclusive: Radar data suggests missing Malaysia plane deliberately flown way off course - sources
- Investigators focus on foul play behind missing plane: sources |
- Search for Malaysian plane may extend to Indian Ocean - U.S |
- Russia blocks internet sites of Putin critics
- Tire blows out on passenger jet taking off from Philadelphia airport