US Federal Reserve Chairman Jerome Powell’s dovish message on an incomplete economic recovery won the day when officials met last month, with a record of the gathering showing a unanimous near-term policy outlook, minutes released on Wednesday showed.
“Participants noted that it would likely be some time until substantial further progress toward the committee’s maximum-employment and price-stability goals would be realized,” minutes from the March 16-17 Federal Open Market Committee (FOMC) meeting showed.
Officials left an asset purchase program of US$120 billion per month unchanged at the meeting and forecast that they would keep the benchmark lending rate near zero until at least 2023 to help the US economy heal from COVID-19. That was despite sharply upgrading projections for growth and employment that has had some investors betting the Fed will act sooner.
“After the March FOMC meeting Chair Powell said it wasn’t yet time to start talking about talking about tapering,” JPMorgan Chase & Co chief US economist Michael Feroli wrote in a note to clients. “The minutes to the March FOMC meeting backed him up, as they barely mentioned future prospects for the Fed’s asset purchase program.”
Even with 916,000 new jobs added to the economy last month, the economy is far from the Fed’s goals of maximum employment and sustainable 2 percent inflation.
Still, there is a sense among some officials that vaccine dissemination, trillions of dollars in fiscal support and low interest rates could lead to a stronger-than-expected rebound.
“The angle of a united front is very deliberate,” said Derek Tang, an economist at LH Meyer/Monetary Policy Analytics in Washington.
Maintaining that unanimity is “dependent on conditions” going forward, he said.
Seven of 18 officials expect the Fed to be in a gradual tightening mode by the end of 2023, projections released at the meeting showed.
Some policymakers are warning investors not to expect the Fed to indefinitely keep policy on an emergency footing.
“I would want to communicate that once it’s clear that we’ve emerged from the pandemic and the Fed has achieved some of these benchmarks we’ve set up, I would rather communicate that they should expect that we will be withdrawing some of this extraordinary level of accommodation,” US Federal Reserve Bank of Dallas President Robert Kaplan said on Wednesday.
The Fed upgraded its forecast from January with real GDP growth expected to exceed potential next year and in 2023, “leading to a decline in the unemployment rate to historically low levels, as monetary policy was assumed to remain highly accommodative,” the minutes said.
It is the kind of hot labor market that Powell has said many times he would like to restore, even while he has pushed aside concerns that it could generate worrisome inflation. The broader committee also seemed to endorse the view.
“Participants expected that inflation would likely move along a trajectory consistent with achieving the committee’s objectives over time, supported by strong aggregate demand, which participants expected would be driven in part by accommodative monetary and fiscal policies,” the minutes said.
Fed Governor Lael Brainard, in an interview with CNBC after the minutes were released, said it was likely that bottlenecks could result in a temporary lift to inflation.
After that, it is “more likely that the entrenched inflation dynamics we have seen for well over a decade will take over,” she said.
SPECULATION: The integrated house and land transaction income tax has been amended as the real-estate market heats up because of high liquidity and low interest rates Lawmakers across party lines yesterday agreed to July 1 as the provisional date on which a draft amendment to the Income Tax Act (所得稅法) is to come into effect, with the aim of curbing real-estate speculation. The consensus was reached following interparty negotiations at the legislature’s Finance Committee to determine when revisions to the “integrated house and land transaction income tax” would take effect. The committee on Monday last week passed a number of revisions to the act, but failed to agree on when they would take effect. Under the proposed revisions, the tax would be set at 45 percent
Several hundred people have already booked their tickets and begun training for a spectacular voyage: a few minutes, or perhaps days, in the weightlessness of space. The mainly wealthy first-time space travelers are preparing to take part in one of several private missions which are preparing to launch. The era of space tourism is on the horizon 60 years after Soviet cosmonaut Yuri Gagarin became the first person in space. Two companies, Virgin Galactic and Blue Origin LLC, are building spacecraft capable of sending private clients on suborbital flights to the edge of space lasting several minutes. Glenn King is the director of
TAICHUNG PLANT: An official said that generator No. 3 had been retrofitted and it generates 0.46g of particulate pollution per kilowatt-hour, down from 0.6g to 0.7g A spike in demand for electricity made it necessary to restart the third coal-fired generator at the Taichung Power Plant, Taiwan Power Co (Taipower, 台電) said yesterday as a feud with the Taichung City Government lingers. Taichung Mayor Lu Shiow-yen (盧秀燕) has sought to keep the generator from being used. In 2019, he revoked Taipower’s license to operate the generator. However, the state-run utility has taken the city government to court over the license revocation and won the case in February last year, Taipower manager Chang Ting-shu (張廷抒) said. “We would like to remind the Taichung City Government that operation of the third
Broadband providers are seeing delays of more than a year when ordering Internet routers, becoming yet another victim of chip shortages choking global supply chains and adding challenges for millions still working from home. Carriers have been quoted order times as long as 60 weeks, more than doubling previous waits, said people familiar with the matter, who asked not to be named because the discussions are private. Sharp COVID-19 manufacturing shutdowns a year ago were exacerbated by a prolonged surge in demand for better home broadband equipment, said Karsten Gewecke, head of European regional business for Zyxel Communications Corp (合勤), a Taiwan-based