Fed Vice-Chair Clarida says central bank won't raise interest rates from near-zero until it sees 2% inflation for months

• Federal Reserve Vice Chairman Richard Clarida told Bloomberg on Wednesday that the central bank will not raise interest rates until it sees 2% inflation for at least a few months and full employment is reached.
• "We're not going to even begin to think about lifting off," until then, said Clarida.
• He added that he is projecting a "pretty impressive return" to very low unemployment in the US within three years.

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Federal Reserve Vice Chairman Richard Clarida told Bloomberg that the central bank won't raise interest rates until it sees 2% inflation for at least a few months and full employment is reached.

"We're not going to even begin to think about lifting off, we expect, until we actually get observed inflation — and we measure it on a year-over-year basis, equal to 2%," he said. "Also we want our labor market indicators to be consistent with maximum employment."

In a Wednesday interview, Clarida reiterated the message the FOMC delivered last week: The Fed will keep interest rates at near-zero through 2023.

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Clarida also said that the US economy has taken the most severe hit since the Great Depression, but his projections indicate that within three years the country will be back to a "very low unemployment rate" and inflation at the 2% objective.

"In the prior economic downturn that took nine years, so we actually see relative to historical experience a pretty impressive return in our baseline projection," he said.

But he said that the pandemic has placed the nation in a "deep hole," and additional fiscal stimulus support from Congress will likely be necessary to help climb out.