Fed Leaves Interest Rates Near Zero as Economic Recovery Slows

Mr. Biden’s aides have been conducting meetings and listening sessions about his proposals with interest groups, governors, mayors, and Republicans and Democrats on Capitol Hill, Jen Psaki, the White House press secretary, told reporters on Wednesday.

Mr. Biden will hold a briefing on relief efforts with the new Treasury secretary, Janet L. Yellen, and other members of his economic team on Friday, Ms. Psaki said.

Mr. Powell said he expected to have a good working relationship with Ms. Yellen, who preceded him as Fed chair and will now become his most important partner in fighting the economic fallout from the virus. He has not met with her since her confirmation, he said, nor has he met with Mr. Biden.

While they have not talked, Mr. Powell echoed Mr. Biden’s view that mass vaccination was the key to getting the virus — and the economy — under control. Mr. Powell himself has had his first vaccination shot, he said, and expects his second soon.

Any change to the Fed’s policies may be on hold, but its efforts have played a continuing role in the economic rebound. Low rates have helped the economy avoid an even deeper slump, including by fueling a robust housing market. The Fed also rolled out a sweeping series of financial market rescue programs last year, several of which remain in place. Those helped keep credit flowing during the worst of the pandemic-related market turmoil.

Yet some analysts have warned that the Fed’s policies endanger financial stability as they push stock prices higher and cause investors to seek out ever-sketchier assets for better payouts.

“While there is for now no alternative to continued monetary policy support, there are legitimate concerns around excessive risk-taking and market exuberance,” International Monetary Fund officials warned in a blog post on Wednesday. “With investors betting on persistent policy backstop, a sense of complacency appears to be permeating markets.”

Article source: https://www.nytimes.com/2021/01/27/business/economy/fed-interest-rates-economy.html