Fed's Clarida: Downside economic risks have diminished due to vaccine
Comments from the Fed vice chair
- Vaccine news has brightened economic prospects
- It will take some time for economy to recovery to pre-virus peak
- Fed will use its full range of tools to aid economy
- Pace of economic recovery moderated in the fourth quarter
- Spending on goods is strong, services spending suppressed
- Inflation leveled out after picking up over summer
There's a shift ongoing where the Fed has buried the idea of more stimulus and is now much more constructive.
- Don't expects jobs setback in December to continue in 2021
- Time to slow pace of bond buying 'well down the road'
- Expects to keep pace of QE through 2021
- Could see inflation above 2% due to base effects
- Predicts inflation will finish this year above last year but still below 2% target
- We have policy positioned exactly where we want it
- Rates at these levels are not a concern for me
- We have to take into account why yields are rising
Treasury yields are pushing higher again.