Fed's Harker sees no reason to withdraw monetary policy support yet

  • 5/11/2021
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May 11 (Reuters) - Health concerns, lack of child care and an inconsistent recovery across sectors are among the factors slowing the U.S. labor market recovery, and the Federal Reserve needs to provide continued support to the economy, Philadelphia Fed President Patrick Harker said on Tuesday. Hesitancy among some Americans to get the COVID-19 vaccine and the possibility that new virus variants may emerge pose risks to the economy, said Harker, who added he expects gross domestic product to grow by 7% in 2021 and about 3% in 2022. “While the economic situation is improving, recovery is still a work in progress, and there’s no reason to withdraw support yet,” Harker said in remarks prepared for a virtual event organized by CFA Society Philadelphia. The job growth seen in April, when the U.S. economy added 266,000 positions, was “extremely disappointing,” but probably an outlier given the strong fundamentals supporting the recovery, said Harker, adding that employment could return to pre-pandemic trends by next summer. Fed policymakers are keeping a close eye on inflation, which could get a lift from the U.S. central bank’s easy monetary policy and strong fiscal support, Harker said. However, he expects price growth to remain tame, with headline inflation rising 2.3% this year and core inflation growing 2%. (Reporting by Jonnelle Marte Editing by Paul Simao) Our Standards: The Thomson Reuters Trust Principles.

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