Fed's Powell warns on COVID, sees inflation unlikely

By Reuters5 days ago

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By Ann Saphir and Howard Schneider

April 8 (Reuters) - Federal Reserve Chair Jerome Powell on Thursday signaled the central bank is nowhere near to reducing its support for the U.S. economy, noting that an expected rise in prices this year is likely to be temporary, and warning that an uptick in COVID-19 cases could slow the recovery.

“Cases are moving back up here, so I would just urge that people do get vaccinated and continue socially distancing,“ said Powell, who has been vaccinated himself, speaking at an economic forum during the virtual International Monetary Fund and World Bank meetings. “We don't want to get another outbreak: even if it might have less economic damage and kill fewer people, it'll slow down the recovery.“

Speaking at a separate event, St. Louis Federal Reserve president James Bullard said the Fed should not even discuss changes in monetary policy until it is clear the pandemic is over, tying future Fed discussions tightly to the success of a vaccination program.

The Fed's current guidance is that policy discussions will hinge on making “substantial further progress“ towards meeting the central bank's employment and inflation goals, but Bullard said he regards that as contingent on beating the coronavirus. “We have to get the pandemic behind us first,“ he said. “There are still risks and things could go in a different direction.“

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