Jerome Powell Says Better Outlook Reflects Vaccine Progress, Fiscal Aid By Bloomberg

(Bloomberg) — Federal Reserve Chair Jerome Powell​ said a more upbeat economic forecast from the central bank reflected widening vaccinations against Covid-19 and the historic fiscal support from Washington.

“We’ve seen something like 85 million Americans have now had at least one shot. Daily shots are running at 2.5 million. And that’s going to enable us to reopen the economy sooner than might have been expected,” Powell said Thursday in an interview on National Public Radio’s Morning Edition show.

“The amount of fiscal support the economy has received is historically large, and that’s going to result in higher economic activity and hiring,” he said. “I’d want Congress to get the bulk of the credit here.”

In quarterly forecasts published following the central bank’s policy meeting last week, Fed officials projected economic growth of 6.5% in 2021. That would be the fastest pace since 1983 when measured from the fourth quarter over the same three months a year earlier and would follow a 2.4% contraction in 2020 as a result of the pandemic.

Fed officials held interest rates near zero at that meeting and said they’d maintain their massive bond-buying campaign at a $120 billion monthly pace until “substantial further progress” had been achieved on their goals for employment and inflation.

“As we make substantial further progress toward our goals, we’ll gradually roll back the amount of Treasury and mortgage-backed securities we’re buying. And then in the longer run, we’ve set out a test that will enable us to raise interest rates,” Powell said.

“So, we will — very, very gradually, over time, and with great transparency, when the economy has all but fully recovered — we will be pulling back the support that we provided during emergency times,” he said.

(Adds more Powell comment in final two paragraphs.)

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