Minneapolis Fed President Also Says "US Economy Faces Difficult V-Shaped Recovery"

[Asia Economy New York=Correspondent Baek Jong-min] Neel Kashkari, President of the Minneapolis Federal Reserve Bank (photo), expressed skepticism about a V-shaped recovery of the U.S. economy, stating that the COVID-19 pandemic will be prolonged.

[Image source=Reuters Yonhap News]

On the 12th (local time), Kashkari appeared on CBS's "Face the Nation" and pointed out that the possibility of an early exit from the COVID-19 recession and a rapid economic recovery is overly optimistic.

He said, "It would be surprising if a new treatment emerges within a few months," and predicted, "A V-shaped rebound will occur only after a treatment is developed."

Kashkari warned, "As restrictions are lifted, the virus is attacking us again," and said, "It will take about 18 months to revive the healthcare system and the economy."

He is a voting member of the Federal Open Market Committee (FOMC), which determines U.S. monetary policy this year. His pessimistic view contrasts with those of Jerome Powell, Chair of the Fed, and James Bullard, President of the St. Louis Federal Reserve Bank, who previously predicted a sharp V-shaped recovery.

Powell recently forecasted a strong rebound of the U.S. economy during a Brookings Institution virtual seminar. Bullard also suggested a V-shaped recovery, despite expecting the unemployment rate to reach 32% in the second quarter. Kashkari’s remarks indicate that Fed officials have differing predictions about the economic outlook. Furthermore, they imply that if the economy fails to recover early, the Fed may take additional measures.

He predicted, "It is unclear whether the current economic support measures are insufficient, but if the development of a COVID-19 vaccine is delayed or economic activity remains suspended over the next few months, additional assistance will be necessary." Loretta Mester, President of the Cleveland Federal Reserve Bank and also a voting member of this year’s FOMC, expressed a similar view. At an event on the 9th, she argued that the Fed has not yet used all its ammunition to support the collapsing real economy. She emphasized, "We will always act if necessary."

This content was produced with the assistance of AI translation services.