SMM: although the US economy rebounded better than expected, a number of Fed officials still stressed the importance of fiscal stimulus to the economic recovery on Wednesday.
With bipartisan negotiations over the new stimulus bill deadlocked, Federal Reserve Chairman Jerome Powell continued to call for financial support at congressional hearings, saying more stimulus measures may be necessary for economic recovery. Other Fed officials spoke louder than Mr Powell, and Cleveland Fed President Loretta Mester said stimulus was necessary given that the economy was trying to climb out of the "deep hole".
Chicago Fed President Charles Evans expressed concern that the expected bailout measures may not come, and Boston Fed President Eric Rosengren hinted that if there is a new wave of infection, quick action must be taken, probably not until next year.
U. S. stocks have been lower on fears of economic recovery and the need for more stimulus. As of 03:05 New York time, the S & P 500 was down 2.3%, its fifth decline in six days. The Nasdaq (10632.9853,-330.65,-3.02%) 100 index tumbled 3.2%.
"the hardest part of the recovery is yet to come," Rosengren said in a speech on Wednesday. He is more pessimistic than his colleagues about how many Americans will return to work in the next 15 months.
The Boston Fed president is particularly concerned about signs of "interference" in commercial real estate. 'There was no shortage of dangerous behavior in the industry before the outbreak, and now commercial real estate has been hit by the impact of the epidemic on industries such as hotels and shopping malls,'he said.
"like a pandemic, structural shocks could lead to a significant increase in the number of non-performing loans, ultimately affecting the ability of banks and insurance companies to provide credit," Rosengren said.
Like Powell, Fed Vice Chairman Richard Clarida stressed in an interview that the recovery has so far been faster than officials expected a few months ago, but the road ahead will be difficult, and renewed financial support will help the economy.
"the US economy is recovering strongly, but we are still in a deep hole," he said. In the long run, the United States needs to return to a sustainable fiscal path, but you don't want to do that when the economy suffers the worst downturn in 90 years. "
Fed officials released new economic forecasts on September 16th, lowering the median unemployment rate for the fourth quarter of 2020 to 7.6% from 8.4% expected in August, and is expected to be 5.5% by the end of 2021.
Rosengren said his view was "not very optimistic". Evans said his own forecast was based on a $1, 000bn new stimulus package to be launched by the government.