Dual assurances from Biden and Powell
President-elect Joe Biden and Fed chairman Jerome Powell had two messages in public remarks on Thursday:
- Biden's: Help is on the way.
- Powell's: Help is here to stay.
What Biden's saying: "In this moment of crisis, with interest rates at historic lows, we cannot afford inaction," Biden said while unveiling his $1.9 trillion relief package.
Powell cautioned the Fed won’t pull back anytime soon Thursday afternoon.
- He said interest rate hikes are a long way off and played down the possibility of a persistent inflation spike.
- "Now is not the time" for the Fed to talk about exiting its massive bond-buying program, Powell said — despite suggestions to the contrary by other Fed members.
Between the lines, via the University of Oregon's Tim Duy: A bigger economic package "now suggests more progress toward recovery which in turn suggests earlier tapering. It’s kind of hard to avoid that conclusion."
The backdrop: More signs of economic pain in the face of a surging virus. New applications for unemployment benefits across programs soared to a seven-month high.
- It "raises the specter that we could see more jobs lost in January, meaning there is more of a risk the situation gets a little worse before it gets better," Beth Ann Bovino, U.S. chief economist at S&P Ratings, writes in a note.
The bottom line: You won't see the economic pain "if your scorecard is how things are going on Wall Street," Biden said.
- "But you will see it very clearly if you examine what the twin crises of a pandemic and this sinking economy have laid bare."
Go deeper on Biden's plan.