Federal Reserve Chair Jerome Powell said the US economy is at an “inflection point,” and that growth and job creation is poised to accelerate.
Powell made the comments during an interview on CBS News’ “60 Minutes.” In the interview, Powell provided a rosier economic outlook, in contrast to past remarks on the economy’s recovery.
“What we’re seeing now is really an economy that seems to be much at an inflection point,” Powell told “60 minutes” during the interview. “And that’s because of widespread vaccination and strong fiscal support, strong monetary policy support. We feel like we’re at a place where the economy’s about to start growing much more quickly and job creation coming in much more quickly. The outlook has brightened substantially.”
But that’s only if there isn’t another wave of Covid-19.
“The principal risk to our economy right now really is that the disease would spread again. It’s going to be smart if people can continue to socially distance and wear masks,” he told “60 Minutes.”
This comes after minutes released from the central bank last week underscored that it would be some time “until substantial further progress” was made on employment and inflation. The Fed slashed interest rates to zero in March 2020 and said it expects to keep interest rates at historically low levels into 2023.
“We did not know how the economy would perform. We did not know the path of the disease,” Powell said in the “60 Minutes” interview. “We had no idea when and how long it would take to do a vaccine.”
When probed if he expected the current economic downturn to mirror anything like the 2008 financial crisis, Powell said that the chances are “very low.” Instead, Powell mentioned “cyber risk” being the main concern, citing examples of large firms losing the ability to track payments its disbursing.
“We spend so much time and energy and money guarding against these things. There are cyber-attacks every day on all major institutions now,” he told “60 Minutes.” “That’s a big part of the threat picture in today’s world.”
Last month, Powell said that any increases in inflation over the summer months would be temporary and not concerning for its monetary policy at this moment. During his interview with “60 Minutes”, Powell reiterated that past economic cycles showed that inflation didn’t increase much as unemployment went down.
“That means that we can afford to wait to see actual inflation appear before we raise interest rates,” he said. Powell added that the Fed wants inflation to move up above 2% “on a sustainable basis” before it decides to raise interest rates.
“We do have the ability to wait to see real inflation, and that’s what we plan on doing,” Powell said in the interview.