Monetary stimulus will remain in place well into economic recovery, Fed Chair Powell says

<p><img src="https://static2.businessinsider.com/image/6000955ca8de7700187d3eb5-2000/GettyImages-1253515769.jpg" border="0" alt="jerome powell fed mask" data-mce-source="Getty Images / Tasos Katopodis"></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><p>Those worrying the Federal Reserve will prematurely rein in monetary stimulus have little to fear, Fed Chairman Jerome Powell said Thursday.</p><p>As COVID-19 vaccines roll out across the country, investors and economists have looked to Fed officials for any hints as to when its extremely accommodative policy stance could reach its conclusion. The central bank is currently buying $120 billion worth of Treasurys and mortgage-backed securities each month to ease market functioning, and its benchmark interest rate remains near zero to encourage borrowing.</p><p>An unexpected reversal from such easy monetary conditions risks spooking financial markets and cutting into the country's bounce-back. Powell emphasized on Thursday that the central bank remains far from adjusting monetary conditions and that markets need not worry about a surprise policy shift.</p><p>"Now is not the time to be talking about an exit,"&nbsp;the central bank chief said in a <a href="https://www.youtube.com/watch'v=O0cD2t45jcM&amp;feature=emb_title">virtual discussion</a> hosted by Princeton University.&nbsp;"I think that is another lesson of the global financial crisis, is be careful not to exit too early. And by the way, try not to talk about exit all the time if you're not sending that signal."</p><p><em><strong>Read more:</strong> <a href="https://www.businessinsider.com/tesla-stock-price-prediction-technical-analysis-wedge-rsi-sven-henrich-2021-1" data-analytics-position="3" data-analytics-module="">'Vastly technically disconnected': A market strategist breaks down the 3 indicators that show Tesla is overpricedand says it's due for a 17% correction in the next 6 weeks</a></em></p><p>The messaging mirrors past statements from Fed policymakers. Early in the pandemic, Powell told reporters the central bank wasn't "thinking about thinking about" lifting interest rates. The Federal Open Market Committee noted last month that changes to its policy stance won't arrive until "substantial forward progress" toward its inflation and employment objectives is made.</p><p>Still, recent commentary from some officials has stoked some fears that the Fed could cut down on the pace of its asset purchases sooner than expected. Kansas City Fed President Esther George said Tuesday that inflation could reach the Fed's target "<a href="https://www.businessinsider.com/economic-outlook-inflation-rate-fed-target-esther-george-economic-recovery-2021-1">more quickly than some might expect</a>" if the economy's hardest hit sectors quickly recover.</p><p>A swifter-than-expected rebound could prompt an interest-rate hike as early as mid-2022 Atlanta Fed President Raphael Bostic said Monday. The projection stands in contrast with the FOMC's general expectation for rates to remain near zero through 2023.</p><p>Powell reassured that, when the Fed starts considering a more hawkish stance, messaging will come well before action is taken.&nbsp;Treasury yields responded in kind, with the 10-year yield climbing nearly 4 basis points to 1.127 and the 30-year yield rising about 6 basis points to 1.874.</p><p>"We'll communicate very clearly to the public and we'll do so, by the way, well in advance of active consideration of beginning a gradual taper of asset purchases," the Fed chair said.</p><p><em><strong>Read more:</strong> <a href="https://www.businessinsider.com/stocks-to-buy-morgan-stanley-gain-on-oil-demand-forecast-2021-1" data-analytics-position="12" data-analytics-module="">Morgan Stanley says to buy these 26 economically sensitive stocks poised to outperform as oil prices spike 10% by year-end</a></em></p><p><a href="https://www.businessinsider.com/fed-stimulus-asset-purchases-rates-remain-economic-recovery-jerome-powell-2021-1#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="https://www.businessinsider.com/how-symphony-seas-worlds-largest-cruise-ship-deals-with-waste-2020-3">How waste is dealt with on the world's largest cruise ship</a></p>
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