Washington (US), February 25: The U.S. economy remains far from the Federal Reserve's goals for employment and inflation, and monetary policy will continue to provide support to the economy, a senior Fed official said Wednesday.
"Today the economy remains far from our goals in terms of both employment and inflation, and it will take some time to achieve substantial further progress," Fed board governor Lael Brainard said during a virtual lecture at Harvard University.
"Jobs are still down by 10 million relative to pre-COVID levels, and COVID has disproportionately harmed certain sectors, groups of workers, businesses, and states and localities, leading to a K-shaped recovery," Brainard said, noting the real unemployment rate is close to 10 percent.
"When we take into consideration the more than 4 million workers who have left the labor force since the pandemic started, as well as misclassification, the unemployment rate is close to 10 percent currently - much higher than the headline unemployment rate of 6.3 percent," she said.
Brainard also said the Fed's new monetary policy framework, which seeks to achieve inflation that averages 2 percent over time, would help the central bank avoid prematurely tightening monetary policy and reach the goal of full employment.
"Our new monetary policy framework recognizes that removing accommodation preemptively as headline unemployment reaches low levels in anticipation of inflationary pressures that may not materialize may result in an unwarranted loss of opportunity for many Americans," she said.
While various measures of inflation expectations have picked up recently, overall inflation "remains very low", Brainard noted, adding it will be important to see a sustained improvement in actual inflation to meet the average inflation goal.
The central bank last month decided to hold its policy rate near zero and continue its asset purchase program at least at the current pace of 120 billion U.S. dollars per month until it sees "substantial further progress" in employment and inflation.
Source: Xinhua