Brainard says the new approach to monetary policy avoids the need for preemptive adjustments

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St. Louis Federal Reserve Chairman James Bullard said Wednesday that the Federal Reserve’s new approach to monetary policy avoids the need for preventive adjustments, as reported by Reuters.

Additional comments:

Avoiding a preventive rate adjustment could boost employment and the growth rate potential of the economy. “

“The moment of takeoff of the interest rate depends on progress made towards maximum employment and average inflation of 2%“.

“It is likely that changes in the Fed’s policy rate after take-off are only gradual“.

“Coronavirus vaccines and additional fiscal support are positive developments, but the short-term economic outlook remains challenging.”

The economy remains far from our targets as it lost momentum in the fourth quarter of 2020“.

“The continued social distancing in the cold winter months probably weigh on expense“.

Inflation is still very low; it may temporarily rise above 2% in a few months, but we need to see sustained improvement to meet our target. “

Employment is still far from targets the Fed and the economic recovery is very uneven. “

“The economic outlook is very uncertain and will depend on the trajectory of the virus and the vaccination campaign“.

“There is some upside risk if vaccines trigger a global synchronized expansion.”

“It is too early to say how long it will take to achieve the Fed’s targets.”

“The current pace of the Fed’s asset buying is expected to remain appropriate for quite some time.”

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