US economy on track for strong jobs market despite Delta: Fed's Powell

[WASHINGTON] The US economic recovery is on track to return to a strong labour market, and the central bank could begin to withdraw its stimulus measures by year-end, Federal Reserve Chair Jerome Powell said on Friday.

But the Fed leader stressed that there was no hurry to raise the benchmark lending rate in response to temporary inflation pressures.

In his highly anticipated speech to the annual Jackson Hole central banking symposium, Mr Powell said despite the impact of the Delta variant of Covid-19, the economy has continued to recover and show strong job growth.

While inflation is currently running at a high 4.2 per cent annually as of July, Mr Powell said it was likely to decline as temporary pressures, like skyrocketing prices for used cars, recede.

He warned that moving to respond to temporary inflation pressures "may do more harm than good." "The ill-timed policy move unnecessarily slows hiring and other economic activity and pushes inflation lower than desired," he said, warning that with the labour market still recovering, "Such a mistake could be particularly harmful." Any move to taper the pace of bond buying would still leave a large amount of stimulus in place, he added.

AFP