Fed’s Barkin: Recovery will be bumpy but elevated saving, potential for more stimulus are backstops – CNBC

“Escalating cases will hurt us in the first quarter, first half. The second half will be very strong,” said Richmond Federal Reserve President Thomas Barkin, per CNBC, on Thursday.

The policymaker also mentioned that the recovery will be bumpy but elevated saving, the potential for more stimulus are backstops.

Additional comments

Will see stronger inflation in Q2 because of lower inflation a year earlier.

Will need to see substantial progress toward goals before discussion on QE taper gets on the table.

Declines to say if see Fed bond taper in 2021.

Fed not given date-specific guidance on bond-buying.

Fed focused on dual mandate, not focused on dollar.

Important for Fed to go as hard as we can to try to achieve our goals

Fed has tools to keep inflation under control.

Unemployment rate not a good measure for where economy is now.

Labour force participation bigger issue, it has taken a big hit.

A lot of jobs will come back with vaccines.

Expects job market to make lot of progress in 2021

Market implications

With the recent jump in the inflation expectations, such comments from the Fed policymaker favor risks. As a result, AUD/USD ticks up from 0.7698 to 0.7704 following the news. However, broad risk-off mood, weighed by the coronavirus (COVID-19) woes and political drama in the US, not to forget the Sino-American tussle, probes the market sentiment.