WITH NEARLY 2% INFLATION RATE, US ECONOMY ON STRONG RECOVERY PATH

The U.S. economy is at an “inflection point” with expectations that growth and hiring will pick up speed in the months ahead and data on the economy has been positive by and large, with a better-than-expected jobs created in March and some Fed officials suggesting a run of a million new jobs a month is possible later this year. Base case forecast is for “very strong” job growth in the months ahead, and that it is “in the range of possibility” for the U.S. to see “quick progress to maximum employment.”

Fed is also not about to change its current policy of near zero interest rates and bond purchases of $120 billion per month. It’s likely to maintain it till fully economic recovery.

Those hardest hit by the pandemic, including low wage workers in the service sector, could see their jobs return with relative haste in coming months as more and more activities are considered safe to resume.

Officials intend to keep support for the economy in place until the recovery is largely complete, and “stick with those people and support them as they try to get back to where they were in life, which was working.”

Still, even with March’s big increase in employment, the labor market remains 8.4 million jobs short of where it was in February 2020, just before the pandemic triggered an historic downturn, and even further short of where the level of employment would be now had the pandemic never occurred.

A new Fed framework puts more weight on job creation, and builds in allowances for inflation to run above the central bank’s 2% target for a time without the Fed intervening to rein it in.A coming upswing in inflation readings is likely to be transitory and won’t cause the Fed to change it plans for monetary policy.