“Right now I’m not concerned about it – this is like wartime spending,” Kashkari said at an online seminar held by Montana’s Bureau of Business and Economic Research, in response to a question about the risks of government borrowing too much in the face of the pandemic. “We have the capacity to do what we need to do.”
The Fed has said it will keep interest rates at their current near-zero level until the economy reaches full employment and inflation not only reaches 2% but looks set to exceed it for some time. It has also pledged to keep buying at least $120 billion of Treasuries and mortgage-backed securities until there is “substantial further progress” toward both of those goals.
“The key now is for the Federal Reserve to keep our foot on the monetary policy gas until we really have achieved maximum employment as we call it,” Kashkari said. “And I think it’s going to be important for Congress to continue to be aggressive supporting people who have been laid off, supporting small businesses until we really get the pandemic behind us and restore the economy.”
Kashkari added that the Fed is still far from even thinking about making adjustments to its balance sheet policy.
Source: Economy - investing.com
