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Fed rules out US rate hike soon

15 minutes. The president of the US Federal Reserve (Fed, central bank), Jerome Powell, stressed this Thursday that he does not foresee a rise in interest rates in the US “soon”, noting that the economy is “very far from maximum employment,” while It is about recovering activity after the crisis caused by the pandemic.

Powell indicated that he does not expect a hike in the benchmark rates “soon” and added that “now is not the time to think about a way out” of the enormous monetary stimulus deployed.

The latest forecasts from the Fed point to an economic growth in 2021 of 4.2%, after the fall of 2.4% registered last year.

The US central bank has kept interest rates around 0% since March, when it carried out an abrupt cut in the price of money in the face of the arrival of the coronavirus pandemic in the country.

“We are far from maximum employment (…) What we are most focused on is recovering a job market fast enough for people’s lives to go back to where they want them to be,” Powell said in a virtual conversation at the University from Princeton.

Rise in unemployment

The outbreak of the virus in the US in March and the consequent restrictions adopted to curb it sent the unemployment rate up to 14.7% in April, a figure not seen in more than 50 years, compared to 3.5% in February.

Since then, and thanks to a huge monetary and fiscal support, it has been reduced to 6.7% with which it closed in December.

It also ruled out the risk in the near future of high inflationary pressures, currently below the annual objective of 2%.

“There is considerable scope in the labor market and it is unlikely that the pressures on wages will reach a level that could create and support high inflation,” he said Powell.

The next Fed meeting, the first in 2021, is scheduled for January 26-27.

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