Contrary to the popular belief, the US economy is doing fine. According to Mr. Bullard, the president at the Federal Reserve Bank of St. Louis, the economic recession that came with the pandemic is on the recovery path.
However, he claims that the central bank will carry on with its assistive attitude towards the U.S economy. During the second quarter, a record-breaking 30% yearly decline in GDP had America worried.
On a CNBC show, Bullard shared his prediction that the recession would only last for 2 months. He further anticipated that from the third quarter onwards economic expansion would be underway.
Regardless of the economic progress, Mr. James did not envision the Fed making adjustments to current policies. These involved schemes to purchase different bonds, as well as standard high rates of interest plunging back to their lowest.
The central banker established that the economy’s state has less to do with the financial policies and more to do with the coronavirus. The current day economy is still trying to adapt to the virus and its risks.
Therefore, Bullard does not believe that fiscal policies require modifications. Instead, the strategy being practiced is to keep a low policy rate for a prolonged period.
Similar views were shared by the chair of the Federal Reserve Bank during an earlier virtual conference. Mr. Powell explained that for the time being, the bank was prepared to let the rates of inflation go above its 2% mark.
This of course was on the condition that these rates had formerly been below the mark.
However, Powell said that an aimed target of a 2% average could not be achieved using formulas only. Fed representatives suggested other favorable results like growth rate rather than a mere increase in inflation.
Bullard added that the objective was to keep inflation expectancy at 2% by maintaining it above ‘half a percent’.
Many fiscal leniencies had expired earlier. Therefore, Powell and other Fed officials stated that the economy would require further monetary support from the government to redeem itself.
Bullard expressed that economically beneficial deals could still be signed. He asserted that the increase in salary for US citizens was proof of the availability of the present financial resources.
Recent weekly results from the labor sector disclosed that above a million unemployed people applied for such benefits.