More from Feds George: Outlook pretty optimistic for 2H 2021

Author: Greg Michalowski | Category: Central Banks

More from Feds Esther George

  • Remains the case that the virus is the driver of the economy right now
  • Outlook pretty optimistic for 2H of 2021
  • Risks include logistics around vaccination program
  • Fiscal policy remain important to US economic activity until the virus is in the rearview mirror
  • clear that the mix of mortgage securities and treasuries will continue until economy is through this critical phase..
  • Debate over bond purchases will commence when it is clear Fed is on track to meet its inflation and employment goals.
  • To the extent economic optimism is behind rising long-term bond yields is consistent with the Fed policy.
  • Rise in long-term yields so far is not concerning, and does not reflect tightening financial conditions(the 10 year yield is currently trading at 1.283% +7.5 basis points on the day)
  • Policymakers will have to do with long-term implications of federal debt at some point
  • Right now the economy needs a bridge to get past Covid
  • Cost to federal government will not be insignificant in the future when interest rates increase.
  • Does not see near-term inflation problems
  • Could see price pressure build as people return to work
  • Fed not looking at one-time price increases in particular industries
  • Minimum wage increase comes to pass remains to be seen if it would be passed through to higher prices.
  • Small businesses saying concerned about impact of higher minimum wage on margins
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