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U.S. Fed official says current pace of asset purchases appropriate for quite some time
Last Updated: 2021-01-14 03:47 | Xinhua
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A senior U.S. Federal Reserve official said on Wednesday that the central bank's current pace of asset purchases will remain appropriate "for quite some time" as the economy slowly recovers from the COVID-19 pandemic.

"The economy is far away from our goals in terms of both employment and inflation, and even under an optimistic outlook, it will take time to achieve substantial further progress," Fed board governor Lael Brainard said at a virtual event sponsored by the Canadian Association for Business Economics.

"Given my baseline outlook, I expect that the current pace of purchases will remain appropriate for quite some time," she said.

The Fed last month decided to continue its asset purchase program at least at the current pace of 120 billion U.S. dollars per month until it sees "substantial further progress" in employment and inflation.

"In assessing substantial further progress, I will be looking for sustained improvements in realized and expected inflation and will examine a range of indicators to assess shortfalls from maximum employment," Brainard said.

"We remain far from our goals, with core PCE inflation only at 1.4 percent and payroll employment nearly 10 million below its pre-pandemic level," she added.

The Fed official noted that the K-shaped recovery remains highly uneven in the United States, with certain sectors and groups experiencing substantial hardship.

"Federal Reserve staff analysis indicates that unemployment is likely above 20 percent for workers in the bottom wage quartile, while it has fallen below 5 percent for the top wage quartile," she said.

Brainard also stressed that U.S. economic outlook will depend on the path of the virus and vaccinations as the number of new COVID-19 cases is rising.

"Spending on in-person services is likely to return to pre-pandemic levels only as conditions around the virus improve substantially," she said.

Tim Duy, professor of the University of Oregon and a long-time Fed watcher, believed that the Fed is unlikely to make changes to its current asset purchase program until the second half of the year.

"I don't anticipate it will be sometime in the third quarter before the Fed has the data to justify considering a policy shift," Duy wrote Wednesday in a blog post. Enditem

(Editor:Fu Bo)

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U.S. Fed official says current pace of asset purchases appropriate for quite some time
Source:Xinhua | 2021-01-14 03:47
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