Eighteen months into the pandemic, Jerome H. Powell offered the clearest sign yet that the Federal Reserve is prepared to soon withdraw one leg of the support it’s been providing to the economy as conditions strengthen. But the Fed chair made clear that interest rate increases remain far away, and that the central bank is closely watching risks posed by Delta.
The Fed has been trying to bolster economic activity by buying $120 billion in government-backed bonds each month, helping to keep many kinds of borrowing cheap, and officials are actively debating when to begin slowing those purchases. They have said they would like to make “substantial further progress” toward stable inflation and full employment before doing so.
Mr. Powell, who is speaking at a closely watched conference that the Kansas City Fed hosts each year, used his remarks to explain that he thinks the Fed has made sufficient progress when it comes to inflation, and “clear progress toward maximum employment.”
The Fed chair said that, as of July’s policy discussion, “I was of the view, as were most participants, that if the economy evolved broadly as anticipated, it could be appropriate to start reducing the pace of asset purchases this year.”