By Jonnelle Marte (Reuters) – The US economy could grow between 5% and 6% this year, driven by increased vaccines and strong fiscal aid, but the Federal Reserve is not going to withdraw its support just yet, chairman of the Federal Reserve Bank of Philadelphia. Patrick Harker said Tuesday. “For now, Fed policy will remain stable,” Harker said in remarks prepared for a virtual event hosted by the Delaware State House. “While the economic situation is improving, the recovery is still in its early stages and there is no reason to withdraw support yet.” Lawmakers agreed last month to leave interest rates near zero and continue to buy $ 120 billion a month in bonds until the economy makes “further substantial progress” toward the Fed’s targets for inflation and maximum employment. A full economic rebound cannot occur until more people get vaccinated and the United States achieves herd immunity, he said. But the announcement Tuesday that federal health agencies recommended pausing use of Johnson & Johnson’s (NYSE 🙂 COVID-19 vaccine after six women developed rare blood clots could cause more people to hesitate to get the vaccines and slow recovery, Harker said. Despite concerns from some economists and politicians that inflation could skyrocket further as the economy recovers, Harker said he is concerned about the opposite – too low inflation. Longer term, the Fed wants inflation to exceed its 2% target to make up for long periods of target non-compliance, Harker said. “We don’t see inflation getting out of control,” Harker said. “If so, we will act accordingly.”
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