The U.S. Federal Reserve's latest policy shift will not have any significant impact on the economy, according to a majority of economists in a Reuters poll who do not expect the central bank to meet its dual mandate until 2023 at least.
BENGALURU - The U.S. Federal Reserve’s latest policy shift will not have any significant impact on the economy, according to a majority of economists in a Reuters poll who do not expect the central bank to meet its dual mandate until 2023 at least.
But the Sept. 8-10 poll showed the Fed’s preferred inflation gauge - the core Personal Consumption Expenditures price index - was forecast to average 1.3% this year, 1.5% next and 1.7% in 2022, largely unchanged from the previous poll. “The current crisis response has made it painfully clear again that the Fed’s policies contributed to a form of capitalism where the rewards benefit high income individuals and large corporations, while small businesses and low income individuals bear the burden.”Despite unprecedented stimulus, recent data showed the labor market recovery was slowing as the COVID-19 pandemic persists and government money to support workers and employers dries up. But U.S.
“The U.S. is bouncing strongly off Q2 lows, but after an initial economic reopening we see modest growth and difficulties in absorbing unemployed labor,” Stephen Gallagher, chief U.S. economist at Societe Generale wrote in a research note. That compared to 32.9% contraction in Q2, growth of 18.8% in Q3 and 6.1% in Q4 predicted last month, and a 5.3% contraction for the full year predicted previously.
“Given these sectors are relatively large in the U.S. this adds to our wariness on getting too excited about the speed of recovery.”
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