Federal Reserve policymakers charged with guiding the economy through its worst collapse in a century diverged broadly this week over what to expect in coming months, with narratives of an unexpectedly fast recovery vying against warnings of a resurgence in the coronavirus pandemic and deepening economic malaise.
The central bank’s monetary policy is already set on a loose and supportive course, and in broad contours at least is unlikely to change much for the next few years.
But in a series of starkly contrasting public statements, policymakers offered differing views on how long it will take the U.S. economy to recover from the crisis brought on by the pandemic.
Boston Fed President Eric Rosengren and Chicago Fed President Charles Evans offered gloomy views on the economic outlook and said Congress needs to enact more fiscal stimulus.
But St. Louis Fed President James Bullard offered a bullish view on the economic recovery, and Richmond Fed Bank President Tom Barkin said he didn’t think the Fed was too far off from its 2% inflation target.
The comments came as Fed Chair Jerome Powell gave the last of three days of testimony before Congress, again on Thursday stressing the need for more fiscal stimulus. Powell warned of the risk that as households spend the last of their stimulus checks and unemployment benefits, there will be a cutback in spending, with some Americans possibly losing their homes.
Rosengren, who self-identified this week as one of the more pessimistic members of the U.S. central bank’s policy-setting Federal Open Market Committee, reiterated on Thursday that he expects a resurgence of coronavirus infections in the fall and winter — a view not uncommon among epidemiologists who study disease transmission.