A year after COVID-19 hit America's shores, Federal Reserve Chairman Jerome Powell once again doubled down on the easy money policies that have defined the central bank's response to the pandemic-fueled economic downturn.
"At the Fed, we will continue to provide the economy the support that it needs for as long as it takes," Powell told reporters after a meeting of the Federal Open Market Committee on Wednesday.
The pivotal committee, which oversees the county's market operations, has decided to maintain the Fed's current policy of near-zero interest rates and sizable asset purchases, ensuring that "monetary policy will continue to deliver powerful support to the economy until the recovery is complete," Powell said.
The chairman emphasized, however, that the recovery still largely depends on the course of the virus and the measures undertaken to stop the spread.
"Looking back, it was clear that addressing a fast-moving global pandemic would be plainly and primarily the realm of health care providers and experts, and we are grateful to them and to all the essential workers for their service and sacrifice," he said.
He also commended federal lawmakers for taking quick measures to rebuild the economy, calling their fiscal response the "fastest and largest" of any post-war economic downturn.
Addressing possible inflation, Powell noted that the current rate remains below the Fed's 2 percent longer-term objective, though he expects 12-month measures to move up as the very low measures from March and April move out of the equation.
"Beyond these base effects, we could also see upward pressure on prices if spending rebounds quickly as the economy continues to reopen, particularly if supply bottlenecks limit how quickly production can respond in the near-term," he said. "However, these one-time increases in prices are likely to have only transient effects on inflation."
Indeed, he stressed that the ability of the U.S. economy to reach full-employment, part of the central bank's dual mandate from the federal government, in the years ahead requires longer-term inflation expectations be "well-anchored at 2 percent."
Again, he repeated the Fed's goal to keep inflation at around 2 percent so that it averages 2 percent over time. So a momentary jump above the rate, which Powell said is likely this year, would not lead the Fed to change course.
"Overall, our interest rate and balance sheet tools are providing powerful support to the economy and will continue to do so," he explained.
Boeing workers at three Midwest plants where military aircraft and weapons are developed have voted to reject the company’s latest contract offer and to continue a strike that started almost three months ago. The strike by about 3,200 machinists at the plants in the Missouri cities of St. Louis and St. Charles, and in Mascoutah, Illinois, is smaller in scale than a walkout last year by 33,000 Boeing workers who assemble commercial jetliners. The president of the International Association of Machinists says Sunday's outcome shows Boeing hasn't adequately addressed wages and retirement benefits. Boeing says Sunday's vote was close with 51% of union members opposing the revised offer.
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Tesla, the car company run by Elon Musk, reported Wednesday that it sold more vehicles in the past three months after boycotts hit hard earlier this year, but profits still fell sharply. Third-quarter earnings fell to $1.4 billion, from $2.2 billion a year earlier. Excluding charges, per share profit of 50 cents came in below analysts' estimate. Tesla shares fell 3.5% in after-hours trading. Musk said the company's robotaxi service, which is available in Austin, Texas, and San Francisco, will roll out to as many as 10 other metro areas by the end of the year.
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