- Federal Reserve Chairman Jerome Powell indicated Friday that the central bank is likely to begin tapering before the end of the year.
- But he said rate hikes aren't imminent as there is still "much ground to cover" before the economy hits full employment.
- The speech was part of the Fed's annual Jackson Hole, Wyoming, symposium.
Federal Reserve Chairman Jerome Powell indicated Friday that the central bank is likely to begin withdrawing some of its easy-money policies before the end of the year, though he still sees interest rate hikes off in the distance.
In a much-anticipated speech as part of the Fed's annual Jackson Hole, Wyoming, symposium, Powell said the economy has reached a point where it no longer needs as much policy support.
Markets reacted positively to Powell's comments, sending major stock indexes to record highs while government bond yields moved lower.
The unemployment rate for July stood at 5.4%, down from the April 2020 high of 14.8% but still reflective of a jobs market that remains well off where it stood before the pandemic. In February 2020, unemployment was 3.5% and there were 6 million more Americans working and 3 million more considered in the labor force.
Powell noted that the delta variant of Covid "presents a near-term risk" to getting back to full employment, but he insisted that "the prospects are good for continued progress toward maximum employment."
He added that some of the factors that pushed inflation higher are starting to abate, though several regional Fed presidents have told CNBC in recent days that they see lasting pressures in their districts.
"Inflation at these levels is, of course, a cause for concern. But that concern is tempered by a number of factors that suggest that these elevated readings are likely to prove temporary," he said.
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