Charles Evans, president of the Federal Bank of Chicago, said on Wednesday (3rd) that he is still optimistic about the economic prospects of the United States. Although further fiscal stimulus policies pursued by Congress will accelerate economic recovery, the Federal Reserve (Fed) will not adjust QE.
Evans said the current economic rebound expected by the Fed is indeed very strong. If the economy needs more stimulation, the Fed will buy US $ 120 billion a month in bond targets and may switch to buying longer-term bonds.
Evans added that the US $ 1.9 billion fiscal stimulus currently under discussion is very beneficial to the economy, but Evans believes the Federal Reserve will not adjust the content of debt purchases.
US President Biden’s fiscal stimulus plan passed a vote in the House of Representatives last week. According to Bloomberg (Bloomberg), the Senate plans to formally discuss the stimulus plan as soon as Wednesday afternoon.
The Democratic Party also strives to resolve the disagreement between the ruling and opposition parties over the stimulus measures for the revision process that began on Thursday (4th), in case the Democrats “remove” and cause the agenda to re-enter the budget conciliation process.
Evans said the current unemployment rate in the United States is 6.3%, and if the economy recovers, it is expected to fall to nearly 5% by the end of this year. However, Evans believes millions of American workers are still waiting to find jobs. Taking this into account, current unemployment could reach 9% or higher.
In addition, Evans said that even if the economy grows rapidly, he also believes that inflation will not grow too fast and is unlikely to reach 3% in the future; even if it rises to 3%, it will have no impact on the economy. The biggest problem is in place. How fast did it go after that to 4%.
Evans said the Federal Reserve will have tools to deal with high and low inflation, and that weak inflation is more difficult than high inflation.