Fed’s Clarida says vaccine rollout has ‘brightened’ 2021 economic outlook

Richard Clarida struck an upbeat note in remarks on January 8, arguing that the rollout of Covid-19 vaccines was likely to result in a stronger economy this year.

The Federal Reserve vice-chair acknowledged the recent surge in Covid cases in the US was a major setback in the near term, but said he still thought economic prospects in 2021 had “brightened”.

Clarida said the recent meeting of the Federal Open Market Committee reflected this. “While nearly all participants continued to judge that the level of uncertainty about the economic outlook remains elevated, fewer participants saw the balance of risks as weighted to the downside than in September,” he told an online conference hosted by the Council on Foreign Relations.

Nevertheless, the Fed vice-chair cautioned that it would take “some time” for the economy to recover to its pre-pandemic level. Until that point is reached, the Fed will continue to provide “powerful support” using its balance sheet and the policy rate, he said.