The Federal Reserve has the tools to do many things, but it cannot solve the public health problems associated with coronaviruses, Boston Fed President Eric Rosengren said Tuesday in an interview with MarketWatch.
“We will not return to full employment until we are also in a situation where the public health problem becomes a lesser problem for employees and consumers,” said Rosengren.
“If we don’t touch public health, there is a limit to what we can do to solve this problem,” he said.
The chairman of the Boston Fed said it was good news that the states were now able to open up. But he said it was not the end of the crisis.
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The only way for restaurants, airlines and other companies to succeed is for customers to feel comfortable coming back.
“It will be a difficult model as the community continues to expand,” said Rosengren.
“Countries that are able to stop the spread of the community and trace infected people will be much more successful in encouraging people to return to bars, restaurants and other types of services that require much more interaction,” a- he declared. .
In a speech on Tuesday, Rosengren said he believed the unemployment rate would still be at double-digit levels by the end of the year.
“If 20% of the job market is retail and restaurants, and people don’t feel comfortable going to retail stores and restaurants, then there will be a lot of people still at the looking for work later this year, “he said.
Rosengren said the Fed’s actions to curb the spread of the coronavirus pandemic in the economy would likely have been enough if the virus had stopped spreading.
“As we have not done so and the spread of the community continues, the longer it lasts, the more likely we are to have structural changes in the economy,” he said.
It is becoming extremely important to limit the damage, said Rosengren. “So we are trying to limit the financial damage, but the public health component should probably continue to be very aggressive.”
Rosengren said that the resumption of the pandemic could be affected by the high levels of debt required to pay for relief efforts.
“We have spent our budget deficit very substantially. I think it should be done. I think that at some point we will have to pay part of the debt we have contracted. This implies that the resulting growth will likely be affected, “he said.
The benchmarks for US stocks closed lower on Tuesday. Dow Jones industrial average
DJIA
It closed 390 points, mostly in the last trading hour, after a report cast doubt on a candidate for the COVID-19 vaccine.