Fed Chair Jerome Powell on Friday maintained the stance that the bond-buying program could be cut down in the coming months, citing favorable prospects even as the delta variant poses risks in the near term.
- Powell said most participants believed conditions could warrant a tapering in the $120-billion monthly purchases starting this year during last month’s meeting.
- Powell noted that “more progress” has since been recorded, citing July employment data but noting the spread of the COVID-19 delta variant.
- The chair noted that while the delta variant presents a near-term risk, “prospects are good” for sustained growth in employment.
- Powell also reiterated his belief that inflation is temporary, and history shows that policymakers should not attempt to offset what are “likely to be temporary fluctuations.”
- The Fed last year committed to maintain rates at a low while inflation is not aligned with its 2% goal.
- “Indeed, responding may do more harm than good,” he said, noting current conditions where rates could hover near zero.