December 16th local time, Federal Reserve Chairman Powell said at a press conference after the Federal Reserve’s interest rate resolution that the Federal Reserve is committed to achieving policy goals, and monetary policy will continue to provide strong support for the economy.
He reiterated that the uncertainty facing the future of the U.S. economy will depend on the development of the coronavirus epidemic, and the next few months can be very challenging.
In a statement, the Federal Reserve said it would continue to buy at least $120 billion in bonds a month until substantial further progress is made towards the Commission’s maximum employment and price stability goals. However, it was not indicated that the purchase period would be extended.
Powell said that today the Federal Reserve has provided additional guidance for the purchase of bonds, with the goal of providing strong support to the U.S. economy. The Federal Reserve will issue a warning before reducing bond purchases.
Powell said that the new guidelines on debt purchase are a strong message. Increasing asset purchases is to increase easing. If the scale of debt purchase is reduced, a warning will be issued long in advance.
Powell stressed that the current recession is unprecedented. It will take some time to get the economy to the pre-epidemic level. No specific figures will be used to clarify “substantive progress”.
He also said that no one should question the Federal Reserve’s commitment to support the U.S. economy. If the Federal Reserve believes that more easing measures are needed, it will provide it.
The Federal Reserve does have flexibility in providing more easing. At present, the Federal Reserve has no intention to add additional loan facilitation instruments.
Powell also revealed that he had met with Biden’s transition team and called to congratulate Yellen on his nomination as the new treasury secretary, but did not discuss the policy with Yellen.
Yellen will not discuss the policy with her until she is confirmed to be elected as the finance minister.
U.S. Treasury Secretary Mnuchin has asked the Federal Reserve to return unused funds, and most of the emergency lending instruments will expire at the end of this month.
Powell has said on multiple occasions that he is inclined to keep these lending instruments running, especially given the surge in the number of coronavirus cases and some state and local governments are re-implementing lockdown measures, which is bound to cool economic activity.
Once the Biden administration comes to power and former Fed Chairman Yellen becomes Treasury Secretary, those plans may resume if the Fed deems it necessary.
Powell reiterated that the pace of economic improvement has slowed down in recent months, and the future path remains highly uncertain. Unemployment continued to rise in November, the pace of job market improvement has slowed down, and the Federal Reserve will not ignore millions of unemployed people.
The coronavirus epidemic has had a significant impact on inflation, and the overall inflation level in the United States is still below the long-term target. Until people feel safe, the U.S. economy cannot achieve a full recovery.
Regarding the coronavirus vaccine, Powell said that the major challenges and uncertainties surrounding the vaccine still exist.