Federal Reserve Chair Jerome Powell said on Thursday that the US economy is unlikely to see “maximum employment” as it recovers from the damage done by the COVID-19 pandemic. 

The US labour market faces a lengthy recovery with millions of people having left the labour force, Powell said. 

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During an event hosted by The Wall Street Journal, Powell said, “I think it’s not at all likely it would reach maximum employment this year. I think it’s going to take some time to get there.” 

He again emphasised that the central bank is in no rush to increase the benchmark lending rates. This was Powell’s attempt to ease the worry felt by financial markets about the increase in borrowing costs if the prices rise. 

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As the economy recovers, Powell said “you could see prices moving up” but those increases are likely to be transient. He explained this as the “difference between a one-time surge in prices and ongoing inflation.”

The Fed will not be acting until the inflation is above the bank’s 2% goal, on the path to remain there “for some time” and return back to maximum employment. 

“We’re not intending to raise interest rates until we see those conditions fulfilled,” Powell said.