Fed’s Kaplan: We will need fiscal stimulus to lower high unemployment
|President of the Federal Reserve Bank of Dallas Robert Kaplan was recently on wires while reiterating his opposition for the negative rates. The Fed policymaker also insisted on the use of fiscal stimulus to combat high unemployment.
Key quotes
Believes the US unemployment rate will be at 10% by the end of 2020, annualized GDP contraction of 25-30% in Q2 2020.
We will need more fiscal stimulus to lower high unemployment.
Does not favor the Fed using negative rates.
Negative rates in the US could do great damage.
A 'V'-shape recovery is unlikely, but possible if we made a massive investment in testing.
If you don't have good testing, contact tracing, treatment or vaccine consumers may not behave as before the crisis.
Cannot remain shut down indefinitely, question is how to open up.
Reopen gradually so it sticks.
Do not want to end up with a spike in infections.
FX implications
The news suggests mixed clues as the defying of negative rates could favor market optimists while downbeat economic projections weigh on the risks. In both cases, the US dollar should gain additional bids. That said, USD/JPY holds onto Thursday’s recovery while taking rounds to 107.30/25.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.