The U.S. Federal Reserve will not raise benchmark interest rates from their current levels near zero until three conditions are met, Fed chair Jerome Powell said in Congressional testimony on 24 February.
First, a broad range of statistical measures must show the labor market has returned to full strength.
Second, inflation must rise to 2 percent.
Third, forecasters must reach a consensus that inflation will remain at 2 percent or more for an extended period.
The Fed is waiting to see “actual progress, not forecast progress” toward those goals, which will “take some time” to achieve, Powell said.
Although inflation will rise this year, the Fed expects the increase will not be large, persistent, or reach “troubling levels,” he added.
The economy has improved since late 2020’s weakness, Powell noted, with interest rates up for bonds and stock prices down among companies impacted by the higher rates.
Although the official unemployment rate was 6.3 percent in January, the practical rate is about 10 percent when people who have given up hope of finding a job are included and some classification issues are corrected, Fed governor Lael Brainerd said in a 24 February speech at Harvard University’s Kennedy School of Government.
TRENDPOST: Only 57.5 percent of the U.S. population is now employed, compared to 61 percent in February 2020, thus, if Powell stands by what he said, rates will remain low for this year and most of next year. As for the 2-percent inflation rate gage, they made that up out of thin air in 2012. It means nothing, and they will invent a new measure when needed.
Regarding the true inflation rate, according to www.shadowstats.com, it is around 9 percent.
