(Reuters) – St. Louis Federal Reserve President James Bullard on Thursday said he expects the U.S. economic recovery to continue this year, underpinned by massive monetary and fiscal support and the rollout of coronavirus vaccines.
“The early arrival of vaccines suggests that the global pandemic will wane during the first half of 2021,” Bullard said in remarks prepared for delivery to the Little Rock Regional Chamber in Arkansas. Though some downside risk remains, he added, “aggregate resources available to fund consumption continue to be exceptionally high, suggesting continued recovery in the first half of 2021.”
The bullish assessment reflects Bullard’s longstanding view that the economy has adapted better than expected to the onslaught of the pandemic, which has worsened in recent months. Fed policymakers have signaled they expect to keep monetary policy accommodative for years to come to nurture the recovery and get inflation back up to the U.S. central bank’s 2% goal.
Fiscal and monetary support have been “exceptionally effective” and indeed are calibrated for an even bigger shock than what occurred, Bullard said.
“As a result, the U.S. labor market recovery is four years ahead of where it was following the 2007-2009 recession,” he said, adding that inflation expectations are also moving higher.
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