Powell’s caginess is understandable. Despite the US job market being far below its peak unemployment rate of 14.7%, only 10.6 million jobs have been recovered over the summer in contrast to the 22.2 million lost in March and April. Worst, the pace of labour market recovery is gradually slowing down following rapid gains when the economy re-opened, allowing many workers to return to their jobs.
US employment figures showed better than expected results in August, but the Federal Reserve remains cautious about the future economic situation. Despite payrolls rising by 1.37 million and unemployment falling from 10.2% to 8.4%, Federal Reserve chairman Jerome Powell sees low interest rates persisting for some time to come.
“We think that the economy’s going to need low interest rates, which support economic activity, for an extended period of time. It will be measured in years,” Powell warned after the US jobs report was released on August 4. Bank of Singapore chief economist Mansoor Mohi-uddin sees the benchmark fed funds interest rate unchanged at 0.00-0.25% for up to the next five years.
