Fed's Kashkari says need to keep up support for economy

Reuters

Published Feb 01, 2021 12:31PM ET

Updated Feb 01, 2021 01:25PM ET

(Reuters) - The U.S. central bank and Congress have responded more to the COVID-19 crisis than they did in the last crisis, Minneapolis Federal Reserve Bank President Neel Kashkari said, and they need to do still more to return the economy faster to its pre-crisis footing.

"Right now I'm not concerned about it - this is like wartime spending," Kashkari said at an online seminar held by Montana’s Bureau of Business and Economic Research, in response to a question about the risks of government borrowing too much in the face of the pandemic. "We have the capacity to do what we need to do."

The Fed has said it will keep interest rates at their current near-zero level until the economy reaches full employment and inflation not only reaches 2% but looks set to exceed it for some time. It has also pledged to keep buying at least $120 billion of Treasuries and mortgage-backed securities until there is "substantial further progress" toward both of those goals.

"The key now is for the Federal Reserve to keep our foot on the monetary policy gas until we really have achieved maximum employment as we call it," Kashkari said. "And I think it's going to be important for Congress to continue to be aggressive supporting people who have been laid off, supporting small businesses until we really get the pandemic behind us and restore the economy."