Fed's Powell to Take Questions on Job Market, Interest Rates, Bond Yields
By Paul Kiernan
WASHINGTON -- Federal Reserve Chairman Jerome Powell is set to
take questions Thursday on the improving U.S. economic outlook and
its implications for the labor market, bond yields and central-bank
Mr. Powell will speak in a half-hour interview beginning at
12:05 p.m. Eastern time as part of The Wall Street Journal Jobs
Summit. The appearance comes as brightening economic forecasts are
pushing up long-term borrowing costs, which could complicate the
Fed's efforts to keep interest rates low to support the
Market participants will be listening closely in part because
they are Mr. Powell's last scheduled public remarks before the
Fed's next policy meeting on March 16-17. He reaffirmed last week
that the central bank will maintain ultralow interest rates and
continue hefty asset purchases until "substantial further progress
has been made" toward its employment and inflation goals.
Fed officials will release at the meeting their updated
projections for interest rates and the economy since December,
which will be of acute interest to the markets.
Steady progress in vaccinating people against Covid-19, combined
with trillions of dollars of fiscal stimulus, have led forecasters
to predict a quicker bounceback in economic activity than they
expected last year. Many market participants also expect that a
burst of spending once the economy fully reopens will push
inflation above the Fed's 2% target, a situation that in the past
would have prompted tighter monetary policy.
But more than a decade of weak inflation led Fed officials last
year to swear off raising interest rates in anticipation of rapidly
rising prices. Mr. Powell said last week that the Fed doesn't
foresee raising its benchmark fed-funds rate from near zero until
three conditions have been met: a range of statistics indicate that
the labor market is at maximum strength, inflation has hit its 2%
target and forecasters expect inflation to remain at that level or
He also said the Fed's employment and inflation goals are
"likely to take some time" to achieve. Inflation remains below 2%
and the labor market remains well short of its pre-pandemic
condition, with some 10 million fewer jobs.
The Fed cut short-term rates to near zero last year and since
June has bought at least $120 billion a month of Treasury debt and
mortgage-backed securities. Policy makers say the efforts have
reduced borrowing costs and are providing meaningful support to the
But yields on 10-year Treasury notes, which influence
longer-term borrowing costs for consumers and businesses, have
risen notably in recent weeks. Mr. Powell has said in recent
appearances that he isn't concerned about the rise in bond yields,
which he has attributed to growing optimism about the recovery.
But Fed Governor Lael Brainard said Tuesday that a sharp
increase in Treasury yields last week "caught my eye."
"I am paying close attention to market developments," Ms.
Brainard said in a video appearance. "I would be concerned if I saw
disorderly conditions or persistent tightening and financial
conditions that could slow progress towards our goal."
(END) Dow Jones Newswires
March 04, 2021 10:54 ET (15:54 GMT)
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