What's Next For The US Economy
Speculation around the future of the US economy is widespread currently, however, informed investors and politicians have considerably different opinions.
Here's What Fed President Bostic Had to Say About the US Economy's Future
Atlanta’s Fed President Raphael Bostic said in an interview that the US GDP could recover by the fourth quarter of 2021. He has based these estimates on the idea that the economy will begin to recover from the Covid-19 recession as soon as the vaccinations are rolled out nationwide, becoming more widely available, and also the $1.9 trillion stimulus package providing aid to more people in the US.
This leads to Bostic indicating that the Fed may have to raise interest rates as soon as mid-2022. However, most Fed officials do not see rates increasing until 2023, yet they are still anticipating strong growth later this year.
At the moment, $5 trillion has been allocated by Congress for relief spending for the economy, while the Fed has supported by providing near-zero short-term borrowing rates and over $3 trillion of liquidity through their large-scale asset-purchase program.
As the $1.9 trillion stimulus package is very close to being approved, markets are starting to bet higher on reflation trades, benefiting from the riskier assets at the expense of the greenback.
The high hopes from the Fed’s Bostic have failed to offer any respite to the USD, as the dollar index dropped 0.18% to 90.77.
