The US economy may recover to pre-crisis levels this year, said James Ballard, chairman of the Federal Reserve Bank (FRB) of St. Louis.
“For this to happen, real GDP must grow 35% at an annual rate in the third quarter and about 10.3% at an annual rate in the fourth quarter,” he said Thursday at the Global Interdependence Center (GIC) webinar. … According to Ballard, quoted in a GIC press release, such a development is “not beyond the realm of possibility.”
In addition, a few days earlier, Ballard said on Bloomberg Television that the US economic recovery will continue even if Congress does not take new support measures. “I don't think there is an urgent need for a new budget package,” he said.
Meanwhile, the head of the Federal Reserve Bank of Chicago Charles Evans on Thursday noted that until there is sufficient progress in controlling the spread of the virus, a full economic recovery will be difficult.
Speaking to members of the Illinois Chamber of Commerce, Evans stressed the need for new fiscal stimulus.
“More budget support will be needed to limit further damage to households and businesses,” he said.
That view is close to that of Fed Chairman Jerome Powell, who said this week that the US economy will recover faster from the coronavirus crisis, while fiscal and monetary stimulus measures are in place.
Ballard on Thursday also gave a forecast for inflation, according to which the figure could exceed the target level of 2% this year. According to the Fed's forecast, published at the end of the September meeting, the regulator does not expect to reach this level before 2023.
The head of the Federal Reserve Bank of Chicago, in turn, noted on Wednesday that he agrees with the Fed's median forecast and does not expect an increase in interest rates during this period, writes The Wall Street Journal. He stressed that he is one of those Fed leaders who are willing to put up with accelerated inflation in order to improve conditions in the labor market.
“We need to be clear that 2.5% inflation is quite possible over a period of time if we do our job well,” Evans said.
The President of the Federal Reserve Bank (FRB) of Richmond, Thomas Barkin, also noted that he is paying more attention to reducing unemployment. On Thursday, he said he was not worried about the outlook for accelerating inflation.
“In the current environment of stable inflationary expectations, I expect moderate inflation, backed by market forces and price transparency,” he said.
According to Barkin, although inflation remains below the 2% target, it is close to that level, and “rounding up, we can say that it has reached the target.”
The Fed Chairs of St. Louis, Chicago and Richmond are not voting members of the Federal Open Market Committee (FOMC) this year.