- Fed's Governor Brainard: Premature withdrawal of fiscal aid risks entrenching recessionary dynamics
Market news
21 October 2020
Fed's Governor Brainard: Premature withdrawal of fiscal aid risks entrenching recessionary dynamics
- Aside from virus, biggest downside risk is no fiscal support
- U.S. recovery highly uneven and highly uncertain
- Q3 GDP has likely recovered more than half of its H1 decline
- Financing conditions favorable for large businesses, tight for small businesses
- Labor market improvement rapid but uneven, easiest gains behind us
- U.S. rates likely to stay below neutral for a period after liftoff
- In the months ahead Fed to clarify how asset purchases to best work with forward guidance
- Premature withdrawal of fiscal support would risk allowing recessionary dynamics to become entrenched, holding back employment and spending, increasing scarring from extended unemployment spells, leading more businesses to shutter, and ultimately harming productive capacity
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