WASHINGTON • Mr Jerome Powell, the Federal Reserve chairman, stressed on Thursday that even as economic prospects look brighter in the United States, getting the world vaccinated and controlling the coronavirus pandemic remain critical to the global outlook.
"Viruses are no respecters of borders," Mr Powell said while speaking on an International Monetary Fund (IMF) panel. "Until the world, really, is vaccinated, we're all going to be at risk of new mutations and we won't be able to really resume activity with confidence all around the world."
While some advanced economies, including the US, are moving quickly towards widespread vaccination, many emerging-market countries lag far behind: Some have administered as little as one dose per 1,000 residents.
Mr Powell joined a chorus of global policy officials in emphasising how important it is that all nations - not just the richest ones - are able to widely protect against the coronavirus.
IMF managing director Kristalina Georgieva said policymakers need to remain focused on public health as the key policy priority.
"This year, next year, vaccine policy is economic policy," Ms Georgieva said, speaking on the same panel. "It is even higher priority than the traditional tools of fiscal and monetary policy. Why? Without it, we cannot turn the fate of the world economy around."
Still, she also warned against pulling back on monetary policy support prematurely, saying that clear communication from the US is helpful and important. The Fed is arguably the world's most critical central bank, thanks to the widely used dollar, and unexpected policy changes in the country can roil global markets and make it harder for less developed economies to recover.
"Premature withdrawal of support can cut the recovery short," she cautioned.
The Fed has held interest rates near zero since March last year, and has been buying about US$120 billion (S$161 billion) in government-backed bonds per month, policies meant to stoke spending by keeping borrowing cheap.
Officials have been clear that they will continue to support the economy until it is closer to their goals of maximum employment and stable inflation - and that while the situation is improving, it is not there yet.
"There are a number of factors that are coming together to support a brighter outlook for the US economy," Mr Powell said, noting that tens of millions of Americans are now fully vaccinated, so the economy should be able to fully reopen fairly soon. "The recovery, though here, remains uneven and incomplete."
Given the pandemic's role in exacerbating inequality, both Mr Powell and Ms Georgieva said it is critical to support workers and make sure they can find their way into new and fitting jobs.
The Fed chairman said policy tends to focus too much on short-term, palliative measures and not enough on longer-term solutions that help to expand economic possibility.
"I think we need to, really as a country - and I'm not talking about any particular Bill - invest in things that will increase the inclusiveness of the economy and the longer-term potential of it," Mr Powell said. "Particularly invest in people, so that they can take part in, contribute to and benefit from the prosperity of our economy."
Those comments come as the Biden administration is pushing for an ambitious US$2 trillion infrastructure package that would include provisions for labour market training, technological research and widespread broadband. The administration has proposed paying for the package by raising corporate taxes.
"For quite some time, we have been in favour of more investment in infrastructure. It helps to boost productivity here in the United States," Ms Georgieva said, calling climate-focused and "social infrastructure" provisions positive. She said they have not had a chance to fully assess the plan, but "broadly speaking, yes, we do support it".
NYTIMES
