Fed’s Harker sees no purpose to withdraw financial coverage assist but

May 11 (Reuters) – Health concerns, inadequate childcare facilities and uneven recovery across all sectors are among the factors slowing the US labor market recovery and the Federal Reserve must continue to support the economy, said Patrick Harker, president of the US Central Bank in Philadelphia Tuesday.

The reluctance of some Americans to get the COVID-19 vaccine and the possibility of new virus variants emerging poses a risk to the economy, Harker said. He expects the gross domestic product to grow by 7% in 2021 and by around 3% in 2022.

“As the economy improves, the recovery is still in the works and there is still no reason to withdraw support,” Harker said in remarks prepared for a virtual event organized by the CFA Society Philadelphia.

Employment growth in April, as the US economy added 266,000 jobs, was “deeply disappointing” but likely an outlier given the strong fundamentals supporting the recovery, Harker said, adding that employment will pick up again by next summer could return to pre-pandemic trends.

Fed policymakers are watching inflation closely, which could boost loose monetary policy and strong fiscal support from the US central bank, Harker said. However, he expects price growth to remain modest, with headline inflation rising 2.3% and core inflation 2% this year. (Reporting by Jonnelle Marte Editing by Paul Simao)

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