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A Federal Reserve official said the US economy was not prepared for the central bank to start repaying its excessive funds, even though the sentiment was flawed.
The remarks by John Williams, President of the Federal Reserve Bank in New York, were delivered Monday amidst interest in the financial markets on the Fed’s mindset. Economic forecasts for central bank regulators last week indicated they were expecting higher interest rates by 2023, a year earlier than previously predicted.
Williams said the economy was “always going well”, in other words the most encouraging since the plague began. But he urged the Fed to adhere to its monetary policy, which was introduced last August, which sets the limits for the adoption of policies.
“Obviously the economy is doing very well, and the middle ground is very good.
“But the information has not progressed sufficiently for the Federal Open Market Committee to change its monetary policy to contribute to economic restructuring.”
The comments appeared to be more cautious in anticipating a rapid legislative change compared to those led by other Fed leaders since the last FOMC meeting.
Speaking to CNBC on Friday, James Bullard, President of the St Louis Fed, sparked interest to sell in US stocks where it says the central bank may be ready to raise interest rates by the end of next year.
Williams said interest rates could not be raised once all jobs were reached and inflation rose by 2% and “kept” going beyond the target for a while.
He also said that any $ 120bn a month purchase would not happen until “progress” was made.
“With a view to changing its mindset in the future, the FOMC has defined the conditions and mechanisms that will be involved in decision-making,” he said.
On Monday, at an event hosted by the Official Monetary and Financial Institutions Forum, think tank, Bullard reiterated the need for the Fed to start considering reimbursement for inflation.
Robert Kaplan, chairman of the Dallas Fed, said the same thing.
“It would be healthier as we move forward to tackle the epidemic and achieve our goals so that we can start making changes to these purchases – Wealth and debt repayment shares – soon,” Kaplan said.
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