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Fed’s Evans Says It Is ‘Reasonable’ to Assume Return to Growth in Second Half

Chicago Federal Reserve leader Charles Evans said Monday the most probable outlook still holds for a modest economic recovery in the latter half of the year as the nation continues to navigate the coronavirus crisis.

“For a baseline outlook, it’s reasonable to assume a legitimate return to growth in the second half of 2020 and into 2021,” Mr. Evans told a group in Michigan via videoconference. “With sufficient progress on testing and tracing, we should see a slow but steady decline in social distancing that will allow more businesses to reopen and consumers to go about their daily lives with a greater semblance of normalcy.”

But he added, “With uncertainty so high and with so many potential difficulties at this still early stage, the likelihood of the baseline scenario may only be a bit higher than that of the more pessimistic possibilities.”

Mr. Evans isn’t currently a voting member of the rate-setting Federal Open Market Committee. His remarks largely repeated those he made last week. The central bank, along with the government, has taken aggressive action to help bridge the economy through its downturn.

Mr. Evans said he sees some evidence this was working. “There is some indication that these policy actions are beginning to cushion the blow from the pandemic on households and businesses,” he said.

“There is some indication that these policy actions are beginning to cushion the blow from the pandemic on households and businesses,” he said.

“We must do all we can so that economic activity can resume once it is safe to do so and focus our efforts on returning to prosperity as quickly as possible,” Mr. Evans said. “Households, businesses, state and local governments, and federal policy makers all have a lot of work to do to get the nation back on its feet. And we will get it done.”

Mr. Evans says the need for support will likely continue for some time to come. “I anticipate that interest rates are going to be low for quite some time,” he said, adding “I suspect that there will be a continuing need for fiscal support” from the government.

Mr. Evans, who spoke after the government reported Friday that unemployment had surged to a postwar high of 14.7%, said the jobless rate will likely fall as the year moves forward and likely end at around 9%. That level is high, but would nevertheless be an improvement from where it is now, he said.
Source: Dow Jones

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