Fed’s Clarida Says Economy is Yet to Achieve Substantial Further Progress

The United States Federal Reserve Vice Chair, Richard Clarida, said on Monday that economic growth could exceed 6% and reach 7% in 2021, as he spoke to an event organized by the Federal Reserve Bank of Atlanta.

The Fed’s Vice Chair believes the rise in inflation is temporary and that the Fed has not yet witnessed the needed substantial further progress in the labor and price stability, or inflation and unemployment goals, which it is looking for, before applying changes to its monetary policy.

“What I would say is, in my judgment, through that April employment report, we have not made substantial further progress.”

“As the data come in, we will have to evaluate that and ultimately make a judgment on that.”

“It looks like the economy if anything can pick up speed this year…We could have growth north of 6%, possibly 7%.

“It may take more time to reopen a $20 trillion economy than it did to shut it down.”

He attributed his expectations to the fact that the pandemic was an unprecedented shock that led to an unprecedented collapse, but pointed to the possibility if an unprecedented recovery. “I think the thing I’m most confident about is we have to be attuned and attentive in looking at the data flow,”

Clarida further noted that the Fed will “give advanced warning before we anticipate scaling back the pace of those purchases.”