Thursday 17 December 2020 7:01 am

Fed ups 2021 growth forecast but warns of a tough winter

Federal Reserve chief Jerome Powell said late on Wednesday evening that there were reasons for optimism in 2021 but the coming months would be “particularly challenging.”

In a statement issued by the Fed’s Open Market Committee, the body also indicated that debt buying would continue until “substantial further progress” is seen on both employment and inflation.

Read more: EY Chief reckons on a 50:50 office/WFH split in 2021

US job figures continue to concern economists across the world and the planned expiry of benefit schemes at the end of this year could worsen matters.

Powell is among many who fear a longer-lasting second wave of the Covid-19 pandemic, with numbers at record highs in many states.

Markets ticked upward on the Fed’s more upbeat note, with hopes of a stimulus deal – seeing $900bn tipped into the US economy – also warming hearts on a frosty Wall St.

GDP is predicted to hit 4.2 per cent in the US in 2021, said the Fed, which would be enough to put the US economy back above pre-pandemic highs.

Employment, however, would take a further two years to recover to pre-Coronavirus days.