Powell: low rates to stay until job, inflation boost

Powell announced the policy shift last month, but attempted to put more meat on the bones Wednesday as to his promise to keep interest rates near zero until inflation is on track to "moderately exceed" the U.S. central bank's 2% inflation target "for some time."

He believes that is required to help the economy continue to heal from the damage caused by the COVID-19 pandemic.

An upbeat Powell said the economy is already rebounding faster than most policymakers thought just a few weeks ago.

Video Transcript

JEROME POWELL: Before describing today's policy actions, let me briefly review recent economic developments. Economic activity has picked up from its depressed second quarter level when much of the economy was shut down to stem the spread of the virus. With the reopening of many businesses and factories and fewer people withdrawing from social interactions, household spending looks to have recovered about 3/4 of its earlier decline.

The recovery has progressed more quickly than generally expected, and forecasts from FOMC participants for economic growth this year have been revised up since our June summary of economic projections. Even so, overall activity remains well below its level before the pandemic, and the path ahead remains highly uncertain.

With regard to interest rates, we now indicate that we expect it will be appropriate to maintain the current 0% to 1/4% percent target range for the federal funds rate until labor market conditions have reached levels consistent with the committee's assessments of maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time.