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Federal Reserve Unlikely To Raise Rates This Year

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Even as the US economic recovery is rapidly taking off, the Federal Reserve reaffirmed its commitment to stay the course. Last Sunday, Chairman Jerome Powell reaffirmed the central bank’s commitment to keeping the loose monetary policy in place. This includes maintaining the low-interest rates they set at the start of the pandemic.

RELATED: Federal Reserve Officials See Long Economic Recovery Ahead, No Quick Fixes

Federal Reserve Says Raising Interest Rates Unlikely 

Powell confirmed that even as productivity surges, interest rates won’t move for the year. Inflation remains low and millions of Americans still require assistance from the effects of coronavirus. “I think it’s highly unlikely that we would raise rates anything like this year,” Powell told Scott Pelley of “60 Minutes” Sunday.

“I’m in a position to guarantee that the Fed will do everything we can to support the economy for as long as it takes to complete the recovery,” he added.

Pelley said Powell described it as “unspeakable” last year’s pandemic-laden economic crisis. By the spring of 2020, the Fed chairman thought “the level of uncertainty was really frightening” which led them to cut interest rates. This month, the situation seemed to turn the corner.

Powell said the economy is at an inflection point with strong growth coming up. Meanwhile, the pandemic-inflicted weakness is behind them. 

US Recovery is Underway

Part of the support for Americans includes zero short-term borrowing rates and $120 billion a month in bond purchases. The Federal Reserve placed these measures in place between February and April 2020 as the market essentially shut down as lockdowns happened.

With vaccinations in full swing, and businesses slowly reopening yet again, the economy is stirring up. So far, the US has recovered around 13 million since the height of the crisis. The job is by no means done, as there are 9 million more jobs still needing resurrecting. With states and local governments slowly lifting restrictions, recovery is underway. 

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However, Powell said the US will need more effort. Especially for those in lower-income brackets. “We don’t have the answer to everything, but the job that we do for the benefit of the public is incredibly important,” Powell noted. “We do understand that if we get things right, we can really help people.

If the people who are at the margins of the economy are doing well, then the rest of it will take care of itself,” he added. Meanwhile, Fed officials are looking at the GDP rising by 6.5% in 2021. This is potentially the fastest growth rate the US will experience since 1984.

“We and a lot of private-sector forecasters see strong growth and strong job creation starting right now. Really, the outlook has brightened substantially,” Powell noted. 

Substantial Risks 

The growing economy doesn’t mean there are no risks. In particular, Powell reiterated his worry about rising Covid cases. He said people should continue to wear masks and physical distance to keep the recovery going.

While the US financial system’s stability remains unquestioned, Powell does worry about cyberattacks. If the US won’t stay vigilant, cyberattacks could happen one day and cause serious damage.

In contrast, Powell said he’s not worried about inflation. At present, it’s running around 1.6% and is well below the Fed target of 2.0%. The Central Bank pledged to keep interest rates low even if inflation goes over the target. Powell said he would like inflation “on track to move moderately above 2% for some time.

When we get that, that’s when we’ll raise rates. But at the same time, we do have the ability to wait to see real inflation. And that’s what we plan on doing. We’re going to support the economy until recovery is really complete,” Powell noted.

Watch the Inside News report following Fed Chairman Jerome Powell, who said says it’s ‘highly unlikely’ the Fed will raise rates this year:

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Do you agree that the interest should remain low at least until the year? Do you see US recovery going full blast that it outstrips inflation? Let us know what you think. Share your comments below.

4 Comments

4 Comments

  • Tiny Hamilton says:

    No spending like Biden is he thinks money grows on trees, and wants credit for others accomplishments, guess the shape he appears to be in should be in the Hospital.

  • William Phillips says:

    Why would a normal person want interest rates to remain ridiculously low. All this is accomplishing is to allow the markets to get more out of hand and only the very rich are benefiting from this. It also forces prices in stores to increase which means every day people have less money in their wallets. Once again, thank the federal government for not caring about the households that make less than $75K per year.

  • tony herndon says:

    the poor people that cant afford housing to live in to own will make it harder for them i know some people that needs help finding just that they only make enough money to make it by they pay 700 rent on a house with no running water they have to carry water in jugs / buckets the house isnt worth it and not really fit to live in . these people need help like through a housing plan they can afford to make things happen for them after all the state will get their money back over time all states need a housing program for people that dont have a home that really tries to make things work these people work that i know that way things are prices are to high on land and renting and now lumber is high because of shortage . if we the people work together we can over come this shortage on everything that is needed to rise prices on things because of this virus isnt fair to the people thats where their money is going dissenfectant spray almost 7 dollars here thats uncalled for and that armor all company plus i have seen same prices on the same thing for that much . prices need to drop now this is why people are running out of money fast and this is why you all had to help people with bills / and other things if prices were low you shouldnt have had to help / to file taxes now is double what you are paying out so what about that road you are on its running you dry then what a crash thats what money wont be worth nothing then a war with in the USA will brake out and alot more steeling will go on . if you think things are bad now wait until that happens some has al lready happened then now you think the virus is killing a lot of people just wait when it happens the death rate will sky rocket then what are you going to do to fix things more than likely cant if there is one of you and 20 people of the nation left its to late for help now my as well be dead to the world will end with greed and hate we need to work together not against each other team work always works better lets all make this world a better place to live .

  • The Rebel says:

    The socialist party does not understand nor does it care about the following terminology: budgets, inflation, economy, finances, accounting, accountability, etc. America has a senile professional lying politician who was placed in the White House for the controlling undocumented muslim 3rd term regime. America will continue to suffer as a result of a corrupt Congress and a worthless SCOTUS !!!!!

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