Fed's George says rise in long-term rates a sign of optimism

The policymaker said she was concerned that new variants could lead to another increase in infections

  

The recent rise in longer-term interest rates is a sign of growing optimism about the recovery, which could improve as more people are vaccinated against the coronavirus, and does not warrant a response from the Federal Reserve, Kansas City Fed President Esther George said on Thursday.

"Much of this increase likely reflects growing optimism in the strength of the recovery and could be viewed as an encouraging sign of increasing growth expectations," George said in remarks prepared for a virtual event.

Still, monetary policy will remain accommodative for "some time," given uncertainties about the economic outlook, she said. The policymaker said she was concerned that new variants could lead to another increase in infections. She also noted that the economy could not fully recover until businesses and households are no longer held back from daily activities because of the virus.

"The FOMC is positioned to be patient as it follows the outlook for the virus and the economy," George said. "It is too early to discuss pulling back on accommodation given continue elevated unemployment, below-target inflation, and the uncertainties surrounding the outlook."

(Reporting by Jonnelle Marte Editing by Andrea Ricci and Chizu Nomiyama) ((Jonnelle.Marte@thomsonreuters.com; +1 646 978 0908;))

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