U.S. economy remains "long way" from central bank's goals: official

WASHINGTON, May 12 (Xinhua) -- U.S. Federal Reserve Vice Chairman Richard Clarida said on Wednesday that the U.S. economy remains a "long way" from the central bank's inflation and employment goals, pledging to keep the ultra-loose monetary policy in place.

"Notwithstanding the recent flow of encouraging macroeconomic data, the economy remains a long way from our goals, and it is likely to take some time for substantial further progress to be achieved," Clarida said in remarks to the National Association for Business Economics International Symposium.

"Our guidance for interest rates and asset purchases ties the path of the federal funds rate and the size of the balance sheet to our employment and inflation goals. We are committed to using our full range of tools to support the economy for as long as it takes until the job is well and truly done," he said.

The Fed has pledged to keep its benchmark interest rates unchanged at the record-low level of near zero, while continuing its asset purchase program at least at the current pace of 120 billion U.S. dollars per month until the economic recovery makes "substantial further progress."

Clarida's remarks came after the Labor Department reported last week that U.S. employers added 266,000 jobs in April, far fewer than economists' estimates of 1 million new jobs, with the unemployment rate little changed at 6.1 percent.

"After looking at the details of Friday's disappointing employment report, the near-term outlook for the labor market appears to be more uncertain than the outlook for economic activity," he said, adding U.S. employment remains 8.2 million below its pre-pandemic peak.

"At the recent pace of payroll gains-roughly 500,000 per month over the past three months-it would take until August 2022 to restore employment to its pre-pandemic level," he said.

Clarida also played down inflation risks, arguing that the rise in inflation was likely to be proven largely transitory.

"Readings on inflation on a year-over-year basis have recently increased and are likely to rise somewhat further before moderating later this year," he said, expecting inflation to return to, or perhaps run somewhat above, 2 percent in 2022 and 2023.

"This outcome would be entirely consistent with the new framework the Federal Reserve unanimously adopted in August 2020," said the Fed official.

U.S. consumer prices in April rose 0.8 percent from the previous month and 4.2 percent from a year ago, the Labor Department reported earlier Wednesday. It marks the largest 12-month growth since a 4.9-percent increase for the period ending September 2008.