U.S. Fed official calls for patient policy approach to achieve inflation, employment goals

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WASHINGTON, March 23 (Xinhua) — A senior U.S. Federal Reserve official on Tuesday called for a patient policy approach based on outcomes to achieve the central bank’s inflation and employment goals.

“While the outlook has brightened considerably, with jobs nearly 10 million below the pre-COVID level and inflation persistently below 2 percent, the economy remains far from our goals, and it will take some time to achieve substantial further progress,” Fed governor Lael Brainard said in her remarks to the National Association for Business Economics via webcast.

“By taking a patient approach based on outcomes rather than a preemptive approach based on the outlook, policy will be more effective in achieving broad-based and inclusive maximum employment and inflation that averages 2 percent over time,” she said.

Brainard also noted that the fog of uncertainty associated with the virus “has yet to lift completely” and the speed of further improvement in the labor market following the initial rush of reopening is “less clear.”

Some employers may be cautious about significantly increasing payrolls before post-COVID consumption patterns are more firmly established, while others may be implementing measures to stay lean and contain costs, she said.

The Fed last week kept its benchmark interest rate unchanged at the record-low level of near zero, as inflation debate heats up, driven by COVID-19 vaccination progress and the latest relief package.

“Along with realized inflation, I will be monitoring a range of average inflation concepts in the literature to assess the path of policy that would be consistent with closing the inflation gap under a variety of make-up strategies,” Brainard said.

Most Fed officials expect interest rates to remain near zero at least through 2023, according to the Fed’s quarterly economic projections released last week. Enditem

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