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‘Optimistic’ Fed policymakers see U.S. economy about to boom

Federal Reserve policymakers are optimistic about the U.S. economic outlook as more Americans are vaccinated and government aid gets to households and businesses, and they are not going to stand in its way. Richmond Fed President Thomas Barkin compared the pandemic economy to a roller-coaster pausing just before a thrilling high-speed plunge.

With nearly $6 trillion in government relief since the start of the pandemic and super-easy Fed policy, he said, he is “very bullish” on growth this year and expects spending to stay strong in 2022 and 2023. Atlanta Federal Reserve Bank President Raphael Bostic said he is watching for “upside risks” to the economy’s trajectory. Economists expect a government report due on Friday to show 650,000 jobs added this month. New York Federal Reserve Bank President John Williams said earlier in the day that he too is “optimistic” about the overall economy.

All that optimism at the U.S. central bank might, in years past, have signaled that policymakers would soon be ready to raise interest rates. Traders of interest-rate futures are betting on it: Market prices suggest they see the Fed starting to raise rates next year. But that is not what Fed policymakers are saying. Earlier this month, they reiterated a promise to keep interest rates at their current near-zero levels until the economy reaches full employment, inflation hits their 2% goal and is on track to surpass it for some time. They also said they would continue to buy $120 billion in bonds each month to push downward on longer-term borrowing costs until they have seen “substantial further progress” on both their full employment and 2% inflation goals.

‘Optimistic’ Fed policymakers see U.S. economy about to boom, Reuters, Mar 31

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