Boston Fed President Eric Rosengren said in an interview that “labor market is going to be stagnant for the next couple months until we have much more widespread vaccinations.” But going into Q2, ” I’m hoping enough people are vaccinated that we can start spending, particularly in those areas where we haven’t been able to spend,” he added.

Some sectors are most impacted by the coronavirus pandemic, including accommodation, food and entertainment. Rosengren said they will need more fiscal support, until vaccines make it possible for consumers to return. In particular, a fiscal program that provides grants to struggling businesses maybe one of the most effective ways to support mid-sized companies.

In a speech, Fed Vice Chair Richard Clarida outlined six features of the new framework adopted last fall.

• First, the lift off from the effective lower bound (ELB) interest rate was “delayed” until PCE inflation has risen to 2%, while other complementary conditions are met.
• Second, FOMC aims to achieve inflation moderately above 2% “for some time in the service of keeping longer-term inflation expectations well anchored at the 2 percent longer-run goal”.
• Third, monetary policy will “remain accommodative for some time after the conditions to commence policy normalization have been met.”
• Fourth, “policy will aim over time to return inflation to its longer-run goal, which remains 2 percent, but not below”.
• Fifth, inflation that averages 2 percent over time represents an ex ante aspiration of the FOMC, but not a time-inconsistent ex post commitment.
• Sixth, maximum employment is now defined as “the highest level of employment that does not generate sustained pressures that put the price-stability mandate at risk.”

Full speech here.

In a speech, Fed Governor Lael Brainard said that “given my baseline outlook, I expect that the current pace of purchases will remain appropriate for quite some time.” The outlook is “highly uncertain” and forecasts are “subject to revisions. The forward guidance is, thus, “outcome based and tied to realized progress on our goals.”

Looking ahead, “effective vaccines and additional fiscal support are important positive developments”. However, “the near-term outlook is challenging due to the resurgence of the pandemic, and the economy remains far from our goals.”

In particular, “the damage from COVID-19 is concentrated among already challenged groups”, she added. “The K-shaped recovery remains highly uneven, with certain sectors and groups experiencing substantial hardship.”

Full speech here.

Cleveland Fed President Loretta Mester said she’s “comfortable” with monetary policy at the moment. “Asset purchases will be tapered once the Fed is ready to make changes, not reduced suddenly.” “It’s very premature to think we’re getting to the point to change our policy stance,” she added. “We’re quite a while away from a change in the policy stance.”

Separately, Kansas City Fed President Esther George said, “overall, the outlook is for monetary policy to remain accommodative for some time… It is too soon to speculate about the timing of any change in this stance.”

Boston Fed President Eric Rosengren said in a speech that the public health crisis will likely “dissipate over the course of this year”. “The pandemic is likely to continue to be a problem for public health and the economy until widespread vaccinations take hold,” he added. “Nonetheless, with substantial fiscal and monetary support, I expect a robust recovery starting in the second half of this year.”

In response to a question, Rosengren said, “I expect it to be a little while before we’re even talking about tapering on our purchases of government and mortgage-backed securities.”

Full speech here.

St. Louis Fed President James Bullard said it’s an “encouraging sign that the Treasury 10-2 spread is returning to more normal levels for an expansion.” Markets are ” hoping to see the end of the pandemic in 2021,” he added. “. They’re hoping to see good growth going forward, and because of that you’re seeing the yields normalize.”

But he also emphasized, “we want to get through the pandemic and sort of see where the dust settles, then we will be able to think about where to go with balance-sheet policy.” Fed would like to “replicate” the 2013 tapering process “when the time comes”. However, “we are not close to that yet.”

Richmond Fed President Thomas Barkin said in a CNBC interview, “you’re looking at a second half that is going to be very strong “. But the question is “how do we get through where we are today to that second half,” he added. “While it might be bumpy, I think there are backstops here, and in particular, fiscal would be a backstop, I think elevated savings are a backstop.”

Barkin “couldn’t tell” the day when Fed starts to scale back monetary stimulus, as it gave “outcome guidance not data guidance”. But ” this notion of ‘substantial further progress’ is the right way to think about it,” he said. “So there are scenarios certainly where we see strong recovery in unemployment and inflation but there are lots of scenarios where we don’t.”

Atlanta Federal Reserve President Raphael Bostic said, “all of the economic fallout has been a function of how we’ve responded to the public health crisis… Making a forecast about this year is really at its heart a forecast of how well the vaccine is going to penetrate into the population so we’re at a place where we don’t have to be so cautious about how we do our economic activity.”

Though, he added, “there is some possibility that the economy could come back a bit stronger than some are expecting… If that happens, I’m prepared to support pulling back and recalibrating a bit of our accommodation and then considering moving the policy rate.”

“But I don’t see that happening in 2021. A whole lot would have to happen to get us there,” he said. “Then we’ll see into 2022. Maybe the second half of 2022 or even 2023 where that might be more in play.”