Economic activity and hiring have been constrained during coronavirus outbreak, confirming that the recovery will be slow and economy will need more support from monetary and fiscal authorities, Cleveland Federal Reserve Bank chief Loretta Mester said on Friday.
“I really think the recovery will be slow,” Mester told CNBC.
The economic data is likely to point to third-quarter growth after companies resume operations, but that doesn’t mean the economy is no longer in danger, Mester said.
“I actually think there are more challenges ahead and we will have to support the economy to overcome them,” she added.
Powell speech on Thursday indicated that the Fed becomes increasingly inclined to hold rates near zero bound for a very long time to generate inflation above 2% for some time. This inflation risk spooked investors in long-term bonds as well as fuelled speculations that the Fed will make additional easing of monetary conditions in the coming months. USD is expected to remain under pressure next week because of these expectations.
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