Fed pulls back economic aid in face of rising uncertainties
Associated PressWASHINGTON — If you find the current economy a bit confusing, don’t worry: So does the nation’s top economic official, Federal Reserve Chair Jerome Powell. The Fed won’t likely gain a clear view of inflation and the job market, Powell suggested, until COVID-19 and its economic consequences — reduced travel, diminished spending, supply and labor shortages — further ease. “We hope to achieve significantly greater clarity about where this economy’s going and what the characteristics of the post pandemic economy are over the first half of next year,” he said. So it’s very, very difficult to forecast and not easy to set policy.” Powell said the Fed wouldn’t hesitate to rates rates if inflation accelerated, or if consumers and businesses began to expect higher prices, which can become a self-fulfilling trend. “We need to be in a position to act in case in case it becomes necessary to do so or appropriate to do so.” Still, Eric Winograd, an economist at asset manager Alliance Bernstein, said Powell’s comments seemed to suggest that he sees problematic inflation as “hypothetical rather than a realized event.” “The Fed clearly does not think that inflation is likely to stay at or near current levels, nor does it think that the labor market is back to full employment,” Winograd added.