Fed Will Begin Reducing Bond Purchases Before Raising Interest Rates

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The chairman of the Federal Reserve Jerome Powell, today, suggesting that the Fed would follow the same playbook and develop back in 2013 and 2014 once it decides to reverse what it calls its asset purchase program, meaning tapering off those asset purchases would come quote well before any interest rate increase was part of a virtual conversation sponsored by the Economic Club of Washington. Here's some background since last summer, the Fed has been buying about $80 billion in Treasury bonds and about $40 billion In mortgage backed securities each month is a way to boost the economy and to keep the financial market conditions on an even keel. So for now, you can expect interest rates to remain low. He offered this assessment on the U. S. Economy post Cobain 19. E. I think the first thing to realize is that the structure of the economy is always changing. So the economy that we had back in college was one where low unemployment leads a high inflation and inflation state. Hi. It's very different now. And so we have to constantly update our thinking about the way the way the economy actually worked now bringing that to the present. We're coming back to a different economy. It's not going to be the same economy is the one we left and weigh. Don't know. Exact. What that will be, But we have some ideas and we're going to be finding out. I think you're beginning now. One of them is that they'll beam or, of course, they'll beam or remote working remotely. That's one thing another is we've talked to companies and been consulting firms who have pooped surveyed companies and many, many companies have spent the last year thinking about how they can use more effective technology, perhaps at the expense of of the number of people that need it. So do that. Do Their work with fewer people. And that's a lot of the service industry companies that have been traditionally big hirers of relatively low skilled low paid people. So that's a concern because we still have many millions of people from those jobs who were working in public facing service sector jobs. They don't have a lot of other skills or wealth. And so we need to be thinking about what they're going to do and how how they gonna find their way back to the lives and the working lives that they had, and it'll be different. Other ways as well way we'll be learning about that. And we always try to try not to settle on one model of the economy and think that we really understand this because it's ever

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