US Fed in process of removing emergency tools, chair says

ANKARA

The US Federal Reserve is in the process of fully putting away its emergency tools, Chairman Jerome Powell said Tuesday.

"As the emergency had receded we are required to put these tools away. We are in the process of putting away those tools which are reserved for actual emergencies," he said at a virtual teacher and student town hall meeting.

Powell's comments are considered the first hint as to when the central bank would start unrolling its $120 billion monthly asset purchase program that has been in place to support the American economy during the coronavirus pandemic.

The bank's other strong tool has been keeping its benchmark interest rate near zero during the pandemic, but the Fed signaled June 16 that it could make two rate hikes by 2023 at 0.25% each.

"We can see that the pandemic has changed our economy,” said Powell. “It's still unclear if the delta strain will have a significant impact on the economy.”

The Fed head, meanwhile, pointed to weak labor market conditions that impede the economy from full recovery.

"Millions of people in the service sector are still out of work. That's a part of recovery that is far from complete," he said. "The pandemic is still casting a shadow on economic activity."

The US added 943,000 jobs in July and the unemployment rate fell to 5.4%, according to the Labor Department.

The world's largest economy still has 8.7 million unemployed individuals as of July, down from 22 million in March and April 2020 at the beginning of the pandemic.

Powell also said digital assets, such as cryptocurrencies that have been on the rise once again in recent weeks, “is becoming more and more important,” adding it is an interesting and challenging question whether the Fed should have a digital currency.

"We provide physical currency. We don't provide digital currency for the public. It's a challenging question if we should," he said.