The Federal Reserve must continue to support the economy as the recovery from the coronavirus pandemic "will be slow," a top central bank official said Friday.
"There is more pain to sustain the economy through," Cleveland Fed president Loretta Mester told Steve Liesman of CNBC during a "Squawk Box" interview. "As it stands, we need to take our time to evaluate it, but I think accommodative monetary policy will be very important during this recovery."
Earlier this year, the Fed cut rates to near zero when the coronavirus outbreak forced the U.S. economy to stall. The central bank also launched an open-ended asset purchase program to support the economy during this period, among other measures. On Thursday, Fed Chairman Jerome Powell unveiled a groundbreaking inflation policy framework that would keep rates low for longer.
Mester pointed out that the high-frequency data the Fed examined shows that economic activity has slowed somewhat since the country began reopening.
"That's what you'd expect. It'll fit in and start here," said Mester. "It's definitely true that when the economy started reopening, you saw better hiring data and an increase in activity. But I think the virus is what makes things happen."
Coronavirus cases in the US have risen to more than 5.8 million, according to Johns Hopkins University. However, the number of new infections every day has recently decreased and has been below 50,000 since mid-August.
"At least in our district, attitudes have softened and companies are re-evaluating the number of new hires they want to bring back on board because they don't know what the outcome will be," Mester said.
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