Dallas Fed President Robert Kaplan said expected the economy to shrink about -2.5% this year, which is among the most bullish forecasts by Fed’s policymakers. Though, he noted the recession has hit some sectors and some groups of people worse than others. “It will take more than just a vaccine to revive depressed industries”.

The “number one economic policy, more than fiscal or monetary policy, is mask-wearing,” he said. “If there is no fiscal stimulus, mask-wearing, following health protocols will be even more important.”

Also, he’s “skeptical about the benefits of doing more” QE. “The bond-buying needs to curtail, the Fed balance sheet growth needs to curtail” when the pandemic crisis passes. Also, it’s not “healthy” for the markets to be “addicted, or too reliant” on Fed.

Boston Fed President Eric Rosengren said yesterday that “fiscal policy is the right tool for this time”. It’s “tragic that it has not been deployed already”. He also noted that his economic outlook was much weaker than other Fed policymakers because additional fiscal stimulus was not counted in.

“Most of my colleagues had an assumption that there was going to be additional fiscal stimulus. I had a somewhat different assumption,” he said. “I assumed no fiscal stimulus until the beginning of next year. As a result my forecast was much weaker than many of my colleagues.”

Rosengren also said the recovery from the pandemic was made more difficult due to the ” slow build-up of risk in the low-interest-rate environment that preceded the current recession”. He noted that commercial real estate firms have “gradually increased risk by taking on more leverage, which magnifies returns with good outcomes – but also magnifies losses when bad outcomes occur.

Kansas City Fed President Esther George said in a speech that the revised FOMC statement is interpreted as a “tolerance” for higher inflation, “less as a promise to engineer” it. Also, there is “little benefit” in getting too tied up in a “precise mathematical formulation” of the “average”.

She also viewed the statement as a “message of patience”. That is, “we are signaling that the committee is unlikely to preemptively tighten policy at the prospect that inflation is approaching 2 percent, but rather a willingness to wait until the data confirms its arrival”.

Nevertheless, “given an unsettled outlook for inflation, it is not yet clear how much patience will be required,” she added. ” The pandemic has affected prices in a variety of ways, and it will be difficult to assess the underlying pace of inflation until the dust settles. ”

George’s full speech here.

New York Fed President John Williams said allowing “moderate” inflation overshoot “isn’t a number”. But it’s a “guard rail” against expectations that very persistently high inflation would be tolerated. And, “it’s also about proportionality”. “There’s flexibility, and there’s some discretion around that,” he added. “It is specific to the circumstances, and I would also say it is specific to where the economy is.”

Williams also reiterated that the economic outlook is “highly uncertain”. Fiscal policy actions can be very helpful in the short-run. As some parts of the economy have not recovered nearly as much, “target fiscal support would be helpful”.

Chicago Fed President Charles Evans said there is no “strict numerical formula” to determine the time of “liftoff” of interest rate, and “how long to keep policy accommodative after liftoff”. He added that the work on inflation is “unlikely to be complete when we first begin to raise rates”. That means, Fed will “maintain accommodative monetary conditions until our inflation averaging goal is met”. Even though,

Evans also said Fed has the “capacity to do more asset purchases” but he currently doesn’t see the need. At some point, Fed will need to give explicit guidance on future pace or type of asset purchases. Nevertheless, “that’s not where we are, and it’s probably going to be the Spring until I have a better sense”

Fed Chair Jerome Powell said in a speech that the economic expansion is “still far from complete”. “At this early stage I would argue that the risks of policy intervention are still asymmetric,” he added. “Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses.”

Powell also noted, “the risks of overdoing it seem, for now, to be smaller. Even if policy actions ultimately prove to be greater than needed they will not go to waste. The recovery will be stronger and move faster.”

On the economy, Powell also said that the improvement has “moderated” and  “risk that the rapid initial gains from reopening may transition to a longer-than-expected slog back to full recovery.”

Full speech here.