While the US economy seems to be on a track to recovery from the dents made by the COVID-19 pandemic, an optimistic mindset of the Federal Reserve has been in place with the announcement of a projected growth of 6.5%, which was made on Wednesday, implying a 2% boost to the previous estimates. 

An estimated 2.4% rise in inflation is expected with the current recovery efforts made by the administration, however, officials from the Federal Open Market Committee (FOMC) hinted that there were no plans to increase the current interest rates till at least 2023, reported AFP. 

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The economic recovery efforts taken by the US authorities, like the $900 billion relief aid package approved by Congress and the recently passed $1.9 trillion landmark stimulus package initiated by US President Joe Biden, were clearly reflected in the updated projections. 

With the stimulus cheques being rolled out to rescue those facing financial struggles in the US, the spending capacity of the people is expected to rise which is estimated to, in turn, boost employment rates and business-related spending. 

Officials of the FOMC said that the unemployment rate in the US is likely to show a substantial dip by the end of 2021, with the estimated numbers dropping to 4.5% from a steep 6.2%. However, the return to normalcy remains a long-term objective as the pre-pandemic numbers are likely to stabilize till 2023.  

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Financial markets in the US have been concerned that the economy’s stimulus-fueled recovery has the potential to trigger an inflationary spiral that would oblige the central bank to roll-back on easy-money policies it put out as the COVID-19 pandemic began last year, reported AFP. 

However, Federal Reserve officials have downplayed that concern, and their forecasts show economic growth is expected to rise to 3.3% next year, with a parallel reduction in inflation to 2%.

While speaking at a press conference, the chair of the Federal Reserve, Jerome Powell pledged the financial body’s support and said that the Fed “will continue to provide the economy the support it needs, for as long as it takes”, while still painting a cautious picture for the US’s road to economic recovery.