James Bullard predicts the U.S. unemployment rate could soar to 30% in Q2 due to closings intended to stem the spread of coronavirus, and gross domestic product could be cut by half, Bloomberg reports, citing a phone interview with the president of the St. Louis Fed.
He called for a forceful fiscal response to replace the expected $2.5T in lost income in the quarter to help set the U.S. economy up for a strong recovery; the Fed would be poised to take more actions to ensure markets function during a period of high volatility, he said.
The central bank has already cut interest rates to almost zero and pledged to increase its holdings of Treasurys by at least $500B and mortgage securities by at least $200B, as well as revived some crisis-era programs intended to ensure liquidity in financial markets.
“Everything is on the table,” as far as additional lending programs from the Fed, he told Bloomberg’s Steve Matthews.
“There is probably much more in the months ahead depending on where Congress wants to go,” he said.
Previously: Coronavirus updates – Merkel in quarantine, Paul tests positive, U.S. reaches 30K (March 22)