Fed’s Bowman warns threatened economy over new strains of virus

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(Bloomberg) – The U.S. economy still has “a long way to go” to recover from the Covid-19 pandemic and the new variants of the virus are troubling, Federal Reserve Governor Michelle Bowman said.

“The prospect of widespread vaccination is certainly encouraging, but there is still a lot of uncertainty and now is not the time for us to be complacent,” she said Tuesday in response to a question afterwards. delivering a speech on community banks. “We still see the virus posing risks to the economic outlook.”

His remarks closely echoed President Jerome Powell’s cautious tone in a speech he gave last week in which he called for a national effort to return the nation to full employment. The US central bank has announced that it will keep interest rates close to zero until at least 2023 to help the economy rebound from the virus, while continuing to buy treasury bills and dollar-backed securities. mortgages at a rate of $ 120 billion per month until she sees “further substantial progress.” on jobs and inflation.

“Even with a significant recovery in economic activity in the second half of the year, we still have a long way to go before the economy regains full strength,” Bowman said. “While the official reported unemployment rate in January was 6.3%, if you add those millions of people who have lost their jobs or left the workforce, you will get an unemployment rate that is really closer to 10%. . “

Fed officials have struggled to stress that they will not withdraw their political support prematurely amid uncertain backdrop, and Bowman’s vigilance was echoed later Tuesday by his colleague in charge of the Kansas City Fed.

“So far the recovery has been both incomplete and patchy,” Esther George said at a real estate conference. “As vaccination progresses and the virus is brought under control, we could see another robust recovery in economic activity, possibly by the second half of this year. That said, even as we do recover, it seems clear that we are not going back to where we started.

George, who is not voting on monetary policy this year, also warned that there was a risk of financial instability in commercial real estate if economic support wears off before the recovery is sustained.

(Updates with George’s remarks from the sixth paragraph)

© 2021 Bloomberg L.P.

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