The US labor market faces a lengthy recovery and the economy will not see “maximum employment” this year, Federal Reserve Chair Jerome Powell said on Thursday.
While he expressed hope about the restoration of jobs lost during the pandemic, Powell noted that millions of workers have left the labor force.
“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,” Powell said during an event hosted by The Wall Street Journal.
In another effort to assuage financial markets worried that rising prices will lead to increased borrowing costs, he again stressed that the central bank is in no rush to raise its benchmark lending rate.
As the economy recovers, Powell said “you could see prices moving up” but those increases are likely to be transient.
“And this is a difference between a one-time surge in prices and ongoing inflation.”
The Fed, however, will not act until the economy has returned to maximum employment and inflation is both above the bank’s 2.0 percent goal and on track to remain there “for some time.