Fed Chairman Believes The US Economy Is Entering A New Normal
In his brief remarks at a Fed Listens event, the Fed Chairman said the US economy is entering a new normal since the Covid-19 pandemic. He did not discuss the interest rate outlook or offer more specifics about the economic outlook.
Jerome Powell said the US economy may be entering a “new normal” following disruptions from the Covid-19 pandemic. Powell told community and business leaders on September 23 at a Fed Listens event in Washington.
Powell kept his remarks brief, but explained that in regards to inflation and the current economy, “we continue to deal with an unusual set of disruptions”. His opinion isn’t new, as Powell has previously said that the US Economy needs to brace for “some pain” coming to the economy from the central bank as they raise interest rates earlier this month.
The Fed in its recent rate hike raised rates by 75 BPS. For now, the economy is still struggling with inflation, which fell slightly to 8.3% after a summer of record highs.
Powell did not comment on rate hikes at the event. He did not discuss the rate outlook or offer more specifics about the economic outlook. All seven Board governors were on the panel with Philip Jefferson and Lisa Cook making public comment for the first time as Fed officials.
Critics worry about the long-term consequences of this rate hike. On the other hand, world events such as Russia’s invasion of Ukraine have raised prices for precious resources worldwide, which has boosted food and energy prices around the world.
Fed Vice Chair Lael Brainard, speaking later during the event when the panel considered how families are adapting to the post-pandemic economy, noted that price pressures were hitting the most vulnerable particularly hard.
“We have seen high wage growth among the lowest income workers but looking overall, wages haven’t kept up with inflation and inflation is very high,(…). If we look at who bares the burden, everybody is affected by high inflation but of course it puts special burdens on lower income families as well as on people with fixed incomes.”She said
Brainard also spoke during the Fed Board Friday in defense of families and those who react negatively to the price increases. As the US consumer index also rises, the Fed is sacrificing the US economy to stop it.
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