Powell: Downside risks to employment are increasing, and balance sheet reduction may end

PANews reported on October 15th that according to Jinshi, Federal Reserve Chairman Powell delivered a speech on the U.S. economic outlook and monetary policy early Wednesday morning Beijing time. In his speech, Powell elaborated on the role of the Fed's balance sheet and its policy tools during the pandemic. He reviewed policy operations during the pandemic, discussed the current economic situation and monetary policy outlook, and emphasized the Fed's ongoing efforts to maintain economic and financial stability. He noted that although some government data releases have been delayed due to the government shutdown, available data suggest that the outlook for employment and inflation has changed little since September. He emphasized that the Fed will continue to adjust monetary policy based on the economic outlook and the balance of risks, rather than following a pre-set path. Powell also indicated that balance sheet reduction may end in the coming months. The Fed's goal is to ensure sufficient liquidity in the financial system to control short-term interest rate and money market volatility. Powell noted that liquidity conditions are tightening, with repo rates rising and temporary liquidity pressures occurring on some days. He emphasized that experience since 2020 has demonstrated that the balance sheet can be used more flexibly in the future.