The US economy is likely to expand by seven percent this year as it bounces back from the Covid-19 pandemic, its fastest rate since the early 1980s, according to a top official.
New York Fed President John Williams said it was a welcome progress after the toughest period for the economy in living memory and a winter when the pandemic was particularly severe.
Williams made the statements in a speech to be delivered to the Women in Housing and Finance annual conference, noting stronger employment growth would be needed to make the bounceback complete.
He warned against the tendency to “overreact” to price spikes caused by the unique circumstances of the recovering economy this year, while predicting inflation would return to the central bank’s two percent target in 2022.
While expressing optimism that the economy was now headed in the right direction, there is still a long way to go to achieve a robust and full economic recovery.
He credited the Fed’s stimulative policies, including interest rates near zero, with having “positive effects” on the economy, helping Americans to purchase homes and big-ticket goods.
Williams said he expects to see “real GDP increasing around seven percent this year,” calling it “welcome progress after the toughest period for the economy in living memory.”
Meanwhile, conditions so far are not enough for the Fed to alter policy, reiterating the decision of the central bank’s policy-setting Federal Open Markets Committee last week.
