Fed's Bostic says significant portions of US recovery are weak or nonexistent

Fed's Bostic says significant portions of US recovery are weak or nonexistent

President and Chief Executive Officer of the Federal Reserve Bank of Atlanta
President and Chief Executive Officer of the Federal Reserve Bank of Atlanta Raphael W Bostic speaks at a European Financial Forum event in Dublin, Ireland, on Feb 13, 2019. (Photo: REUTERS/Clodagh Kilcoyne)

NEW YORK: It will be a while before the US economy is fully recovered and before the Federal Reserve will raise interest rates or remove the support it is providing financial markets, Atlanta Federal Reserve Bank President Raphael Bostic said on Monday.

"On balance, I am comfortable with our current policy stance," Bostic said in remarks prepared for a virtual event organised for the Securities Industry and Financial Markets Association Annual Meeting. "As I have detailed today, though the US economy continues to show clear signs of recovery, there remain significant portions where the recovery has been weak or nonexistent."

The Fed moved quickly to support the economy in March by slashing rates to zero and launching emergency lending programs to support market functioning. Those programs will stay in place as long as needed, however, market participants should expect the central bank to sunset some of its emergency lending vehicles after the crisis has passed, Bostic said.

The economic crisis caused by the coronavirus pandemic caused the most pain for Black and Hispanic workers, who were disproportionately affected by job losses, Bostic said. Many of the jobs lost may not return, particularly in travel and food services, as companies adjust to lower demand or use technology to replace workers, he said.

Leaders in economics and finance need to openly acknowledge gender, racial and other disparities and support policies that can help close those gaps, he said. For the Fed, that includes supporting the labour market recovery to minimise the risks of long-term damage, Bostic said.

"Indeed, an unnecessarily slow labour market rebound could just drive historic wedges deeper, continuing to exacerbate the geographic, racial, gender, and income disparities in our economy," Bostic said

Source: Reuters

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