The United States will not return to full employment in 2021

The United States will not return to full employment in 2021

The United States will not return to full employment in 2021

The President of the American Central Bank (Fed) Jerome Powell warned Thursday that the United States will probably not return to full employment in 2021, despite the optimism over Joe Biden’s vaccination campaign and stimulus package.

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“I think it is highly unlikely that we will reach full employment this year, I think it will take time to get there,” Jerome Powell warned at a virtual conference hosted by The Wall Street Journal .

The vaccinations carried out with a vengeance in the United States and the trillions of dollars of the recovery plan of Joe Biden which will be added to the previous financial aid make anticipate a mini economic boom from the spring.

Consumption is expected to pick up again, and the employment situation to improve. Prices should also rise, even raising fears of a return to too high inflation, yet absent from the American landscape for a quarter of a century.

Jerome Powell, however, once again brushed aside these concerns, indicating that “there is a difference between a one-off price increase and runaway inflation (…) year after year after year”.

These speculations on inflation lead many observers to believe that the Fed could raise interest rates more than expected, which have been between 0 and 0.25% for a year now.

Here too, the president of the Fed assured that it was out of the question: “we do not intend to raise interest rates before these conditions are met”, that is to say say their dual mandate of price stability and full employment.

He again indicated that when the time came to tighten monetary policy, the communication would be done well upstream, “we’re not going to surprise people with that.”

Bond yields on 10-year Treasuries surged after the Fed boss’s statement, topping 1.53% instead of 1.48% the day before as investors remain concerned about inflation risks.

Jerome Powell also defended the 1.9 trillion dollars of Joe Biden’s stimulus plan, considered too generous by some elected officials and economists, and considered as the possible trigger for too high inflation.

“Don’t stop until the job is done,” he pleaded, noting that “in the latest crisis fiscal policy has retreated and weakened. And that led to a very long and slow recovery ”.

The next meeting of the Fed’s Monetary Policy Committee (FOMC) will take place on March 16 and 17.

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