US economy not yet ready for end to Fed stimulus, top official says
below the average of the last five years and businesses have tacked away from the defensive strategies that helped them through the downturn," said Deloitte chief economist Ian Stewart. "The pandemic, like all major shocks, will reshape the economy and we are likely to see years of normal growth compressed into just a few months.
"Indeed, eight in ten CFOs believe that productivity will run higher in the wake of the pandemic. That offers the hope of a more comprehensive recovery than after the global financial crisis."
The UK government had reimposed England's current lockdown in early January, but began lifting restrictions at the start of March under a phased reopening of the economy.
Washington, US – The recovery in key areas of the US economy is not sufficient enough for the Federal Reserve to start pulling back on its aggressive stimulus program, a top central banker said Monday.
While the Fed has begun to consider when to taper its massive bond-buying program, New York Fed President John Williams told reporters the economy has not made the "substantial progress" required for it to act.
The US economy shed more that 20mn jobs last year amid the pandemic, and still has not recovered 6.8mn of those. Policymakers have stressed that they will wait for more improvements before acting.
"I'm very focused on substantial further progress" on increasing employment and inflation, Williams told reporters.
"It's really about achieving our maximum employment and two per cent inflation goals... and clearly right now, we have not achieved that," he said.
The Fed cut the benchmark lending rate to zero in the early weeks of the pandemic and has been buying US$120bn a month in bonds – US$80bn in US Treasury debt and US$40bn of agency mortgage-backed securities.
"In terms of thinking of potentially adjusting asset purchases, we've set a very clear marker," Williams said.
He noted there has been "strong movement" in employment and inflation data but "this is a time of very high uncertainty" and it's too soon to judge the economy's progress, Williams said.
Unemployment has fallen to 5.9 per cent but remains well above the pre-pandemic level, while year-over-year consumer inflation jumped five percent in May.
Williams and Fed Chair Jerome Powell have downplayed the recent spike in inflation, blaming transitory issues like the uneven reopening of the global economy and supply bottlenecks for most of the increases.
But in their last policy meeting in June, central bankers acknowledged their surprise at the size of the price jump.
They said they will be prepared to pull back on their bond buying in response to "unexpected economic developments," including if the US economy reaches full employment and inflation climbs over two per cent faster than anticipated.