Fed Chairman Jerome Powell returned to “60 Minutes” on Sunday to tell Americans that the economy is going to start growing strongly, but they shouldn’t expect the central banks to start raising interest rates as a result.
Asked by CBS News’ Scott Pelley when the Fed will start “tapping the brakes,” Powell replied: “So what we’ve said is that we’d consider raising rates when the labor market recovery is essentially complete, and we’re back to maximum employment and inflation is back to our 2% goal and is on track to move above 2% for some time.
“It’ll be a while until we get that in place.”
The interview was taped at the Fed headquarters on Friday and aired Sunday evening.
Powell said the economy “seems to be at an inflection point,” with the weakness caused by the pandemic in the rear-view mirror.
“I would say that this growth that we’re expecting in the second half of this year is going to be very strong. And job creation, I would expect to be very strong,” he said.
Forecasters at the Fed and on Wall Street think the economy could grow in a range of 6%-or 7%, he said. That’s the fastest pace of growth since the early 1980s.
Staff told Fed officials in March they believe the economy is on track to see a decline in the unemployment rate to “historically low levels,” according to minutes of the Fed’s last interest-rate committee meeting, released last week.
Powell said the Fed doesn’t have to raise interest rates on worry that inflation will pick up from the strong growth and job creation.
“We can afford to wait to see actual inflation appear before we raise interest rates,” Powell said.
“Now, we don’t want inflation to go up materially above 2% and go back to, you know, the bad old inflation days that we had when you and I were in college,” he said.
“But at the same time, we do have the ability to wait to see real inflation. And that’s what we plan on doing,” he added.