The Federal Reserve Banks are unlikely to “even think about withdrawing policy support” according to Jerome Powell, Fed’s chair.
“We need to guard against the downside risks and not even think about withdrawing policy support until we see that we are really through the pandemic,” Powell said at the Economic Club of New York.
The Federal Reserve Banks are currently purchasing about $80 billion in treasuries and $40 billion in mortgage bonds with it also launching a corporate bonds purchase programme.
The chair further added to the urgency of passing the $1.9 trillion stimulus which might go out by mid March.
“Achieving and sustaining maximum employment will require more than supportive monetary policy,” he said.
Powell also said he expects heard immunity by summer, in which case the economy will take off in the second half of this year.
He also said during the autum-winter wave, much of the economy has performed better than expected, but there are hard hit pockets in leisure, hotels, transport.
The big question is how quickly employment will recover and whether the economy will really bounce back to pre-pandemic levels in just months.
Until then, the fed plans to continue the loose monetary policy with no plans currently to even consider withdrawing support.
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