Corona crisis - Fed chief sees US economy at a turning point

From the point of view of Federal Reserve Chairman Jerome Powell, the American economy has now reached a turning point in the Corona crisis. There is an expectation that the growth and the increase in employment will gain momentum in the coming months, Powell said Sunday evening in the news magazine "60 Minutes" on the television channel CBS. But there is also the risk that a hasty opening of the economy will trigger a sustained increase in the corona numbers.

“There are real risks out there. And the main risk is that we open up too quickly, that people go back to their old ways too quickly, and we see the cases rise again, ”Powell said. It would be wise if people continued to avoid contact and wear masks.

Optimistic for labor market

Powell was confident about the outlook for the job market. The basic scenario assumes “very strong” job growth in the next few months. It is "within the realms of possibility" for the US to make rapid progress towards full employment. The central bank chief reaffirmed that the Fed will not shake its economic policy of low interest rates and bond purchases of 120 billion dollars a month for the time being.

The latest Fed economic forecast predicts the strongest economic growth in the US for almost 40 years. The monetary authorities also expect the unemployment rate to fall to 4,5 percent by the end of the year. Nevertheless, at its most recent interest rate meeting, the central bank left the key rate at 0 to 0,25 percent. She had also promised to raise interest rates only when full employment is reached and the rate of price increases moderately over two percent for some time. However, the Fed does not want to allow a greater overshoot. "We don't want inflation to go well above two percent and go back to the bad old inflation days," Powell said. (Reuters)