The Federal Reserve: The economy is witnessing fundamental transformations… and adapting to the pandemic was among the bright spots


US Federal Reserve Chairman Jerome Powell said the US economy is undergoing “fundamental shifts” as individuals and companies focus on “meeting the demands of a new reality.”
And the Bloomberg news agency reported yesterday that Powell’s remarks were made in an opening statement to a public event during which a wide range of shareholders will be heard called “The Reserve Board Listens.” The US central bank governor did not address monetary policy or the economic outlook in his prepared speech.
“While uncertainty often leads to business stagnation, it can also reflect opportunity, and innovation and adaptability over the past 18 months have been among the few bright spots,” Powell said.
“I was very surprised by the flexibility and creativity, especially with small companies,” he added.
The Fed Listens activities kicked off in 2019, as part of Powell’s review of the central bank’s longer-term strategy, with more than a dozen events at the board’s regional branches across the country.
Central bank branch heads engaged a range of groups and individuals, including unionists, small business owners, and representatives of diverse communities.
And Jerome Powell, the head of the US Federal Reserve, said recently that the US central bank may conclude reducing its purchases of bonds by the middle of next year, if the economy remains on its path, provided that it begins easing stimulus measures at the next meeting.
The US Federal Reserve buys $120 billion a month in treasury bonds and mortgage-backed securities to support the recovery of the world’s largest economy from the Corona virus pandemic.
Powell indicated that the US Federal Reserve discussed an appropriate pace to ease the stimulus if the necessary conditions for doing so were achieved, pointing out that the delta mutator slowed the recovery of the economy, but the continued progress in vaccines would support a return to normal economic conditions.
He said: The growth is likely to continue at a strong pace until the end of the year, as the actions of the US Federal Reserve will ensure that monetary policy supports the economy until the recovery is complete, and the central bank is strongly committed to achieving its goals.
He stressed that it was “very important” that Congress raise the federal debt ceiling in a timely manner, and no one should assume that the central bank can fully protect the economy or financial markets if the United States defaults. Regarding inflation, he said: The US Federal Reserve will take measures if it remains higher than expected, adding that inflation is high and is likely to remain so for months, before proceeding at a moderate pace.
To assess the situation, over a two-and-a-half day period, officials at the US Federal Reserve examined progress in employment and inflation.
On the first front, the slowdown was observed in August after good progress in June and then in July, and only 235,000 jobs were created, three times less than expected, while unemployment rates continued to decline to 5.2 in cent.
Inflation, of course, showed signs of moderation, but it reached 4.2 per cent in a year in August, and remains well above the 2 per cent rate the Federal Reserve wants in the long run.
Several officials from the monetary institution warned in the past weeks that the price hike may remain in effect for a longer period than expected.
“Growth forecasts will be lowered this year, but inflation will be higher,” said Ian Shepherdson, an economist at Pantheon Economics.


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