Federal Reserve chairman Jerome Powell told reporters on Wednesday that rock-bottom interest rates aren't playing a role in driving stock prices higher, while noting that vulnerabilities to the financial system are "moderate."
Why it matters: The statement comes amid unshakeable stock prices and a Reddit-fueled market frenzy — prompting widespread fears of a bubble and the role monetary policy has played in that.
What he's saying: "What's been driving asset prices isn't monetary policy. Expectations about vaccines and fiscal policy — those are the news items that have driven asset values in recent months," Powell said at a news conference, following the release of the Fed's policy statement.
- "The connection between low interest rates and asset values is not as tight as people think," Powell said, though he acknowledged that monetary policy does play some role.
- Powell refused to comment on GameStop directly.
The big picture: The Fed lowered interest rates to near zero at the outset of the pandemic, while launching a bond-buying program and a slew of unprecedented programs to address turmoil in the financial markets.
- Market-watchers argue the Fed's measures have powered the stock market higher and pushed investors into riskier assets for higher returns.
Worth noting: Powell reiterated that the Fed wouldn't pull back on these measures until the economy recovers.
Details: Powell said "there's nothing more important to the economy than vaccinations," while noting that social distancing and mask-wearing as the pandemic persists will help return the economy to normal.
- (He said he has received the first shot of the coronavirus vaccine).