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Last Friday the Federal Reserve Bank of Kansas City held the 2021 Economic Policy Symposium “Macroeconomic Policy in an Uneven Economy”. The virtual event was focused on current economic challenges in the financial market and workable policy solutions.

During Federal Reserve Chairman Jerome Powell’s opening remarks, which can be watched here, he stated that the outlook for the labor market has “brightened considerably in recent months” with job gains rising steadily over the year even with Delta variant cases on the rise.

Powell noted while the “sharp run-up in inflation” is concerning, it is “tempered by a number of factors that suggest that these elevated readings are likely to prove temporary. This assessment is a critical and ongoing one, and we are carefully monitoring incoming data.”

On a highly anticipated subject, Powell indicated that the central bank is likely to begin tapering asset purchases before the end of the year. Powell noted that the economy has now met the “substantial further progress” goal for inflation and saw “clear progress” in the labor market.

In reassuring against imminent rate hikes, he remarked “the timing and pace of the coming reduction in asset purchases will not be intended to carry a direct signal regarding the timing of interest rate liftoff, for which we have articulated a different and substantially more stringent test.”

Powell pointed out in his speech that the Federal Reserve has “much ground to cover to reach maximum employment” before rate hikes happen.

“Chair Powell revealed that he is aligned with the majority of the committee in favoring the tapering of asset purchases this calendar year. As expected, he was also careful to emphasize that this does not mean a rate hike will follow close behind. The recent rise in inflation is prompting the move to taper, but it will be employment that determines liftoff,” responded NAFCU Chief Economist and Vice President of Research Curt Long.

NAFCU encourages member credit unions to submit feedback to share with Federal Reserve Board Governor Michelle Bowman and senior Federal Reserve staff this December through NAFCU’s annual survey; responses are due Sept. 17.

The results of the survey will be summarized in NAFCU's Annual Report on Credit Unions, which has previously been referenced by the Treasury Department.