Fed's Harker says failure to control virus creating more economic uncertainty

Based on average forecasts, Harker said real GDP growth could drop by 20 percent in the first half of this year and then grow by 13 percent in the second half. He said the economy could decline by about 6 percent for the year

Reuters

July 15, 2020 / 10:10 PM IST

The United States has failed to control the coronavirus and there is a high level of uncertainty over how much the pandemic will affect the economy, Philadelphia Federal Reserve Bank President Patrick Harker said on Wednesday.

Based on average forecasts, Harker said real GDP growth could drop by 20 percent in the first half of this year and then grow by 13 percent in the second half. He said the economy could decline by about 6 percent for the year

“That’s a much sharper recession than we experienced during the financial crisis,” Harker said in remarks prepared for a webinar, also noting that projections are “constantly changing along with the path of the virus.”

Policymakers are limited in terms of what they can do to support the economy, Harker said. However, Fed officials will support market functioning by keeping rates near zero and by continuing to purchase about $120 billion worth of Treasury bonds and mortgage-backed securities each month, Harker said.

Harker said public-private partnerships that provide job training can help to ensure that low-wage workers and minorities take part in the recovery.

COVID-19 Vaccine

Frequently Asked Questions

How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

Show