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Recovery 'to continue, though not fast enough': Philadelphia Fed President Harker

Yahoo Finance’s Brian Cheung and Zack Guzman discuss the Federal Reserve's outlook for the U.S. economy amid the pandemic.

Video Transcript

ZACK GUZMAN: As we've been tracking in this pandemic, a lot of the recovery, especially if you listen to Fed chair Jerome Powell, recovery is tied back to how well we're able to handle this second surge here of the coronavirus, especially as cases continue to rise here heading into the winter months.

And that's exactly the same thing we heard from Philadelphia Fed President Patrick Harker speaking today, echoing a lot of those concerns as well, saying it all ties back if we can keep this outbreak limited.

And here to discuss that renewed thinking here with us is Yahoo Finance's Fed reporter Brian Cheung. Brian, it sounds like everybody is really on the same page here. Everything ties back to the pandemic.

BRIAN CHEUNG: It does. And today is a parade of Fed speak, when we consider that there are five members of the Federal Open Market Committee making remarks today. It means that we'll get a full picture, really, of what a lot of these Fed officials think about where the economy is headed right now.

So as you mentioned, Philadelphia Fed President Patrick Harker making remarks earlier this morning. He did say that the recovery, quote, "will continue, though not fast enough," end quote, for GDP to really come back to pre-pandemic form at least by the end of this year. Keep in mind that the [? median ?] member of the FOMC does still see GDP contracting by over 3% for the year 2020.

We also heard from Dallas Fed president Robert Kaplan, who said that he could see the case for keeping rates near zero, quote, "at least until late 2022 or 2023." That actually appears to be even an earlier timeline than a lot of other members of the FOMC, who could even see rates being at that level through longer than that period of time.

And then actually, just a few minutes ago, New York Fed President John Williams saying, quote, "the economy is still in a very weak place with high unemployment, and that's what we're focused on." But he did say that he is optimistic that the economy is on a reasonably good trajectory.

Again, we also have Randall Quarles from the Fed board, in addition to Rich Clarida making remarks today. Some of their remarks were more focused on regulatory supervisory-related issues. But it does seem like, as you mentioned, Zack, the overall theme for the Federal Reserve is, they've got rates at near zero. It'll be that way at least for the medium term.

And they're looking for those inflationary pressures to moderately overshoot its 2% target, in addition to a tightening labor market before they even start to think about thinking about raising rates down the line.

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