The Fed’s policy is already set on a loose and supportive course, and is unlikely to change much for the next few years.
The policymakers have offered different views on how long it will take the US economy to recover from the crisis brought on by The China Virus.
Boston Fed President Eric Rosengren and Chicago Fed President Evans offered gloomy views on the economic outlook and said Congress needs to enact more fiscal stimulus.
St. Louis Fed President Bullard offered a Bullish view on the economic recovery, and Richmond Fed Bank President Barkin said he did not think the Fed was too far off from its 2% inflation target.
The comments came as Fed Chairman Jerome Powell gave the last of 3 days of testimony before Congress, again Thursday stressing the need for more fiscal stimulus.
Chairman Powell warned of the risk that as households spend the last of their aid/relief/stimulus checks and unemployment benefits, there will be a cutback in spending, with some Americans possibly losing their homes.
Mr. Bullard pushed back on dire forecasts Thursday, saying he thought C-19 fatality rates were “unlikely to reach the level of March and April” a view that epidemiologists also broadly share.
Improving treatments and increased vigilance among high-risk individuals should allow the economic recovery to continue, Mr. Bullard said.
Even if policymakers embrace that more positive outlook, Bullard said, the Fed’s new framework means the central bank will keep rates low for longer to address shortfalls in employment and allow more time for inflation to pick up.
The Fed said last week that rates will remain near Zero until the economy reaches maximum employment, and inflation hits the Fed’s 2% target and is on track to stay moderately above 2% for some time.
The central bank could reach that 2% inflation target as early as next year, Mr. Bullard said, a forecast more aggressive than most of his colleagues. Evans, who spoke Thursday for the 3rd time this wk, says he sees inflation reaching 2% by the end of Y 2023.
The Richmond Fed’s Barkin agreed that the new approach could help to modestly increase inflation, and said he did not think the Fed was too far off from its 2% target.
Policymakers said it may take more time for the Fed to achieve its goal of maximum employment, and several officials called on Congress to roll out more aid/relief/stimulus for unemployed Americans, small businesses and state and local governments.
Republican and Democratic lawmakers have failed to pass any new aid since their March $2.3-T package, credited with helping the US economy avoid even worse job loss and business failures than it has suffered. But a Key lawmaker Thursday said that Democrats in the House are working on a $2.2-T stimulus package that could be voted on next week.
Congress must extend aid to the workers most affected by job losses, including low-income workers and Black and Hispanic communities, the Chicago Fed’s Evans said.
“We are taking a very serious and unnecessary risk if we do not extend federal assistance to out-of-work households,” Mr. Evans said in remarks to the Illinois Chamber of Commerce.
“I agree with Chicago’s Fed President’s serious and unnecessary risks opinion if we can not enact a new stimulus package. Both sides of Congress must recognize this and stop playing politics with putting the lives of so many Americans at risks. I agree that homelessness, street rioting, drugs, rent plus mortgage delinquencies are all on the rise and police reform must be quickly adopted but an empty belly is just that, an empty belly which is destructive and a hindrance to clear thinking.
“Election year politics on the stimulus must stop – understand Pelosi and Schumer. It must be done immediately.
Perhaps our fat members of Congress who receive their paid checks timely and without standing in line at an unemployment office or waiting for the mail to arrive should also stop receiving their highly questionable, privileged perquisites in their chauffeured cars should go to the streets, visit their local neighborhoods and see first hand the what the lack of food and loss of shelter really means!
“Maybe, the real test should be to stop members of Congress in receiving any form of compensation, to set their minds straight and to see how urgent the problems(s) really is! Their is nothing like a hungry belly and not having a job to wake up to every day.
“We all know how helpful and successful the first people’s stimulus checks were which according to Government reporting, resulted in 44.5% of the check amount going back into the economy in 10 days. So, what is wrong with a second stimulus check? As one can see, it helps our economic recovery, important to us all,” says editorial contributor and economist Bruce WD Barren.
Making and Keeping America Great!
Have a healthy weekend, Keep the Faith!