Prospects for a US economic recovery are brightening due to progress in the development of vaccines to fight the COVID-19 pandemic, US Federal Reserve Vice Chairman Richard Clarida said on Monday in an online discussion hosted by the Brookings Institution.
“The news has been very good to have now two successful trials with above 90 percent efficacy,” Clarida said, referring to encouraging late-stage trial results from Pfizer Inc and Moderna Inc.
Clarida said that his baseline forecast for next year always included the expectation for a vaccine, but now he feels more confident about that assessment.
“I’ve got more conviction in my baseline for next year and more conviction that the recovery from the pandemic shock in the US can potentially be much more rapid than it was from the global financial crisis,” he said.
The vaccine news combines with good news about pent-up savings, he added.
With the spring round of government payments and extra unemployment support, and with a somewhat curtailed ability to spend money amid the pandemic, Americans have salted away record amounts of cash.
Households have also taken advantage of low interest rates to refinance mortgages, allowing them to reduce monthly payments.
“Fiscal policy was so successful that this was the only downturn in my professional career in which disposable income actually went up in a deep recession, and a lot of that has been saved,” he said.
Still, Clarida said he believed more fiscal and monetary policy measures would likely be needed.
In his prepared remarks and in response to questions, Clarida avoided any signal that he backed increasing the Fed’s monthly asset purchases.
“We will continue to monitor developments and assess how our ongoing asset purchases can best support achieving our maximum-employment and price-stability objectives,” he said, repeating the non-committal guidance Fed Chairman Jerome Powell offered following the Nov. 4 to 5 meeting of the Federal Open Market Committee.
Earlier on Monday, economists at JPMorgan Chase & Co projected the Fed would decide at its Dec. 15 to 16 meeting to extend the maturity of its US$80 billion monthly purchases of US Treasuries to reduce longer-term yields.
Fed officials left interest rates unchanged near zero and made no change to their asset purchases at this month’s gathering.
The Fed is buying about US$120 billion in Treasuries and mortgage-backed bonds every month, partly aimed at lowering borrowing costs for businesses and households.
Clarida also offered his views on how the Fed might eventually calibrate the pace of rate increases once conditions satisfy the Fed’s thresholds for lifting off zero.
The Fed has said it would begin raising rates once inflation has reached 2 percent, is on track to “moderately” exceed 2 percent “for some time” and the labor force has reached maximum employment.
“What ‘moderately’ and ‘for some time’ mean will depend on the initial conditions at liftoff,” Clarida said.
“Crucially, the committee’s judgement on the projected duration and magnitude of the deviation from the 2 percent inflation goal will, at the time of liftoff and every three months thereafter, be communicated in the quarterly Summary of Economic Projections for inflation,” he said.
With the speed cryptocurrency is emerging as the millennial generation’s alternative asset of choice in India, it is hard to imagine that just two years ago a couple of blockchain pioneers were briefly in police custody. Sathvik Vishwanath and Harish BV, cofounders of a then five-year-old start-up, were arrested in late 2018. No, they had not pulled off a shady initial coin offering. Their “crime” was that they put up a kiosk in a mall in Bangalore where customers could swap bitcoin, ether or ripple for cash or vice versa. That was the whole point of unocoin, their crypto token exchange.
FIVE NEW FABS: An acquisition of Siltronic would boost GlobalWafers’ market share from 17 to 30 percent, easily surpassing Japanese rival Sumco’s 25 percent GlobalWafers Inc (環球晶圓) yesterday said it is in final talks to acquire Germany-based Siltronic AG in a 3.75 billion euro (US$4.5 billion) deal, which might help it compete with its closest rival Sumco Corp of Japan. The acquisition would be the fifth for GlobalWafers since 2008, as it has grown to become the world’s No. 3 supplier of silicon wafers through such deals. GlobalWafers, which has a 17 percent market share, would see its market position greatly elevated to 30 percent when combined with Siltronic’s 13 percent, according to a presentation Siltronic gave to its investors at a quarterly conference in August. Sumco
A Chinese factory owned by South Korean semiconductor giant SK Hynix Inc yesterday halted operations after a plant worker was found to have an asymptomatic infection of COVID-19, Xinhua news agency reported. The South Korean worker based at the plant in Chongqing since February had departed on Thursday for South Korea, Xinhua reported. He was tested at Incheon Airport in Seoul and confirmed positive for COVID-19 on Saturday, it reported. All factory staff as well as staff and recent guests at the hotel where the worker lived have been isolated and given nucleic acid tests, the agency said. “We’re cooperating with the local government
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