Despite potential ground news about the coronavirus vaccine, the economy is still in danger and in need of help, San Francisco Federal Reserve President Mary Daly said Tuesday.
A central bank official told CNBC that Fed officials continue to discuss what they can do to help, and that negotiations have included moving forward with a program to buy assets if necessary.
“We have a well-purchased property and we are discussing what we can do more if more is needed and what we should do in terms of negotiating further plans for a property purchase,” Daly told CNBC’s Steve Liesman on Squawk Street Stated “
“Those discussions are always ongoing, but at least in the Federal Open Market Committee meeting this week,” we had a really strong discussion. “I would say more than just talk,” he added. “We are all dedicated to one thing – continue our mission of serving the American people with our high policy tools. I would say our tools are powerful.”
The Daily speaks a day after Pfizer announced that its coronavirus vaccine tests showed more than 90% effectiveness.
While the news started the explosive stock market rally and expressed hope that the eight-month epidemic had become a major hurdle, there was caution that the new months ahead would be difficult.
“Vaccine news is a natural news for everyone out there around the world,” Daly said. “But we also have increasing cases of coronavirus in the US and around the world right now and that’s why it’s my priority.”
He said the Fed “needs to continue to support economics and the American people as they move forward with the virus.” Daly described the current policy as a “really good place” because it could be tightened or tightened depending on the circumstances.
Mixed views on what’s next
Daley’s comments were echoed by other Fed officials on Tuesday, although there seems to be at least some disagreement among FOMC members about the need to stay longer. Daly is a non-voting member this year but will get a vote in 2021.
For example, Robert Clan Plane, president of the Dallas Fed, said earlier that he was also cautious about the outlook for the next two quarters, but that more Fed action would benefit less and provide more effective financial help.
“I think the next two quarters are very challenging, very difficult,” Kaplan said during Bloomberg’s Future Finance conference. “We’re on the horizon again and next year we’ll have a solid year. The point is how bad the next quarters are. It’s a risk of big losses.”
He added that he thinks a second round of funding from Congressional Paycheck Protection Program and some additional changes to the Fed’s Main Street Lending Program will help increase quantitative easing.
However, Boston Fed Chairman Eric Rosengaren warned of the risks of fiscal stability to favorable policies, saying the challenges to the virus need to be addressed.
“This swift action by policymakers has been crucial to improving the economy so far,” Rosengrain told Harvard University’s Kennedy School of Government. “Now, with another wave of infection going on, I mean more financial and financial accommodation is appropriate.”
The Fed already buys at least 120 120 billion in bonds each month, although there is speculation that the buyout structure could turn into long-term bonds. Market participants expect some sort of announcement in December, although Fed Chairman Jerome Powell did not give a hint in this regard during a news conference after his meeting.
In addition to asset purchases, the Fed has cut the benchmark short-term orrow rate to close to zero and is running a number of lending and market support programs implemented during the epidemic.
Powell said the FOMC had a “very useful discussion” about the future of the bond-buying program, but added that “now we feel that this very effective program delivers the right amount of accommodation and support to the markets and so it continues.” “
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