Brainard Says U.S. Economy Still Needs Fiscal, Monetary Help
- Fed governor says monetary policy must shift to accommodation
- Timing of fiscal support a key component of economic outlook
Federal Reserve Governor Lael Brainard said the U.S. economy faces “considerable uncertainty” in the months ahead and called for continued support from both the central bank and fiscal policy makers to help the country recover from the coronavirus pandemic.
“Fiscal support will remain essential to sustaining many families and businesses,” Brainard said Tuesday during a virtual event hosted by the Brookings Institution, adding the timing and size of that support was a “key factor” in the outlook. “In coming months, it will be important for monetary policy to pivot from stabilization to accommodation.”
U.S. central bankers have debated increasing the amount of support their policy provides the economy, and if they should reinforce their guidance on how long interest rates will stay near zero, minutes of their July meeting show. They next meet Sept. 15-16, but that is probably too soon to upgrade their statement, said Julia Coronado, president of MacroPolicy Perspectives LLC.
“I don’t think they are in a hurry,” Coronado said. “They want to get some clarity on the recovery.”