FED’s Kaplan Reminds Us That This Is A Relief Programme
FED's Kaplan is sounding more dovish than Powell, inclining more money being thrown at the economy
Skerdian Meta•Friday, May 1, 2020•1 min read
The Dallas FED president Kaplan made some comments on an interview on Fox a while ago, reminding us that the massive stimulus programme is aimed to be a relief programme and not a stimulus one. We knew it wasn’t a stimulus programme, because it can not stimulate anything if people remain in lock-down.
Comments From the Dallas FED President on Fox
- Main street program offers relief, not stimulus
- Main street facility is intended to bridge businesses through this period
- There will be a need for more stimulus, likely from fiscal
- Likely to get 20% unemployment rate, to end year at rate of 8-10%
- US could decline at 30% annual rate in Q2; contraction for the year likely 4.5-5%
He also tries to forecast the GDP for the coming months. Well, I find it bizarre that he’s trying to forecast GDP this year to within a half-percentage point. There is so much uncertainty at the moment and everyone trying to predict anything will make a fool of themselves later.
More comments:
- It will take until second half of 2021 or into 2022 to work off excess oil inventory
- In near term, disinflation is more likely than inflation
- Interest rates will stay low for long and the Fed will need to do more to bridge this period
That’s more explicit than Powell and says more is coming. It’s not exactly clear what path they will go down.
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Skerdian Meta
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Skerdian Meta Lead Analyst.
Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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