New Delhi: The Federal Reserve chairperson Jerome Powell said the economy of United States may be adjusting to ‘new normal’ after disruptions caused by Covid-19 pandemic.
“We continue to deal with an exceptionally unusual set of disruptions,” Powell told business and community leaders Friday at a Fed Listens event in Washington. “As policy makers we’re committed to using our tools to help see the economy through what has been a uniquely challenging period.”
Powell didn’t go into much detail on the prospects for interest rates or the state of the economy in his brief remarks of welcome. The panel featured all seven of the Board’s governors, with Philip Jefferson and Lisa Cook delivering their first public remarks in their capacities as Fed officials.
The message that firms were still experiencing shortages and scarcity as well as high employee turnover was heard repeatedly by Fed officials. Cara Walton of Harbour Results in Southfield, Michigan, stated that the small- and medium-sized businesses they advise with “can’t find people,” and when they do find them, turnover is significant.
This week, US central bankers increased benchmark lending rate by 0.75% for the third time in a row, which is the fastest pace of tightening since the Fed battled inflation in the 1980s.
Powell and other officials are moving fast to bring down the highest inflation in almost 40 years following slowdown to spot the threat of broadening price pressures. Observers criticised them for this error, however, inflation has been skyrocketed by Russia’s invasion of Ukraine boosting food and energy prices throughout the globe.
Vice chairperson of Fed Lael Brainard, who deliberated a little late during the event when panel considered how American are adapting to post pandemic economy, said “price pressure were hitting the most vulnerable particularly hard”.
“We have seen high wage growth among the lowest income workers but looking overall, wages haven’t kept up with inflation and inflation is very high,” she said. “If we look at who bares the burden, everybody is affected by high inflation but of course it puts special burdens on lower income families as well as on people with fixed incomes.”
US consumer prices increased 8.3% in the year ending in August, and leaders have sworn to bring them down, even at the expense of the US economy and its workforce.
Officials disguise this as an effort to reduce excessive demand and return the labour market to “balance,” but this is a smokescreen for the fact that many people may lose their employment as a result. With unemployment currently at 3.7%, the job market has remained robust. However, policymakers last week predicted that as they continue to hike interest rates, unemployment will increase to about 4.4% next year.
Since 2019, Fed Listens gatherings have taken place across the US as the central bank sought feedback from the general public on a review of its monetary policy methodology. The Fed has continued them even after that makeover was finished in 2021 in order to retain public interest at a time when its activities are still making headlines.
Powell concluded by expressing his gratitude to the panellists for sharing their insights into the post-pandemic economy.
“We get to spend a lot of time with data, here at the Fed. But I personally would say I need to hear narratives, I need to hear stories, about what’s really going on out there for it all to make sense,” he said. “We all learned a lot from you today.”
