Chicago Fed President Charles Evans sad the baseline outlook is for the US economy to shrink 30% to 35% in Q2, with strong growth in the second half. Unemployment rate is expected to be 9% to 9.5% by the end of the year, then fall back to 6.5% next year. The economy would only get back to prior peak by mid or late 2022. However, if there is a second wave of coronavirus infections, he would expect worse unemployment and growth.
On monetary policy, he said it’s very important to get inflation up to 2% and “I’m looking for that to be a real problem over the next few years,.” “I am hard pressed to think of reasons why we would need to move away from accommodative monetary policy unless inflation was well above 2% for an extended period of time, and the economy was just very different from what we are seeing right now,” he added. “That doesn’t seem to be very likely.”
