He said that the economic impact of successive Covid waves over the past year has been less. While we will not be able to see if that is true for the Delta variety, it is certainly reasonable to expect that it will.Investors are closely watching Powell's views on the threat posed the virus. It's likely that it will influence the Fed's decision about how long it will continue its extraordinary support of the economy. The central bank has spent trillions of dollars to support markets since the outbreak of the pandemic. On Wednesday, the Fed gave its first indication that it is closer to reducing some support. Powell however stated that a policy change was not in sight.According to the Centers for Disease Control and Prevention (CDC), more than 80 percent of coronavirus infections are caused by the Delta strain. However, cases are increasing in almost 90 percent of U.S. states. Republican governors and legislators have intensified their efforts to get constituents vaccinated. President Joe Biden stated this week that a mandate to vaccinate all federal employees was under consideration.Powell acknowledged that the Covid surge could slow down the economy by delaying the return of people to the workforce or by causing schools to stay closed longer. As investors become more nervous about long-term growth prospects, bond rates have fallen in recent weeks.Powell acknowledged that it is possible for people to withdraw from certain activities due to the possibility of infection. However, Powell added, "Sitting here today, not being able really know the future. It doesn't seem like the effects will be very significant."He stressed that the vaccine would be beneficial for the economy and help it return to a normal state. However, distribution in other countries is slow.He said that as long as there is time and space to develop new strains, none are really unsafe. Despite the fact that vaccinations are increasing, we can still get back to economic activity.Powell stressed that Powell was not likely to consider raising rates and the Fed maintained its benchmark interest rate at zero.More generally, the Fed expressed optimism about the U.S. outlook and suggested that it is closer to making a decision on whether to reduce its large purchases of government debt. Republicans are putting pressure on the central bank to reduce its assistance, as the economy expands. Economists predict that the government will report on Thursday that the second quarter GDP rose by around 8 percent. This is a shocking pace.The central bank has been purchasing $120 billion per month in U.S. government bonds and mortgage-backed securities. Officials have been discussing when to slow down those bond purchases.After two days of meetings this past week, the Feds policymaking Committee stated that the economy had made progress towards its goals of maximum employment, averaging 2 per cent inflation, and will continue to evaluate progress at future meetings.Powell said that the central bank had almost stopped buying mortgage-backed securities prior to its purchases U.S. government bonds, despite the soaring housing prices. These types of bond purchases feed into other rates in very similar fashion, he said.
