Federal Reserve Bank of New York President John Williams commented recently that the United States economy is not yet ready for the Fed to change its loose monetary policy stance, despite the economic outlook improving significantly due to COVID-19 containment efforts.
“It’s clear that the economy is improving at a rapid rate, and the medium-term outlook is very good,” Williams commented. “But the data and conditions have not progressed enough for the Federal Open Market Committee to shift its monetary policy stance of strong support for the economic recovery.”
Williams made these comments right before Fed Chairman Jerome Powell testified in Congress. Powell confirmed the expectations regarding the economic situation, though he highlighted the uneven nature of economic recovery, as well as the remaining risks associated with the pandemic.
Powell also commented about inflationary pressures, insisting that despite the sudden price rises, they are expected to drop back towards the bank's long-run target. His comments contrast with those of other Federal Reserve policymakers who have recently commented that the Fed may opt for cash rate hikes as early as next year.
Williams commented that raising the rates next year is not plausible at all since the bank will wait for employment and inflation to reach their target levels before considering hiking the interest rates and tapering asset purchases.
Since the beginning of the pandemic, 34,419,838 COVID-19 cases have been reported in the United States, including 389,302 deaths, making it the most affected country in the world. The US is now amid a very ambitious vaccination campaign, though the vaccination rates are currently at their lowest levels since December.
Around 45.2% of the US population has been fully vaccinated, which is about 150 million people. 318 million doses have been distributed among the population.
The United States government now plans to donate 55 million vaccine doses to countries in need, mainly to Latin American and Asian countries.
In order to counter the effects of the virus on the economy, the government is currently implementing one of the most ambitious stimulus plans in US history. It has been reported that US President Joe Biden recently commented to two top members of the Democratic Party that he still has concerns about a potential bipartisan infrastructure plan, particularly about how it's going to be financed.
By 6:30 GMT, the US dollar went up by 0.14% against a bundle of its main competitors, hitting the 92.03 level.