Feb 17 (Reuters) - Dallas Federal Reserve President Robert Kaplan said on Wednesday the race to vaccinate the United States against the coronavirus is his top economic concern, even as he expressed hope efforts to contain the pandemic will be successful, clearing the way for faster growth.
“The most important thing is how we manage the virus, and these variants, and getting people vaccinated and speeding the vaccinations so we head off the potential impact of these variants: that’s still the number one thing I’m watching,” Kaplan told Reuters in an interview.
Kaplan said experts had told him the “race” to vaccinate millions of Americans will be the thing to watch over the next four to six weeks. Suppressing the virus “is going to be critical to how soon restaurants, arts, entertainment, travel, leisure, a whole range of activities can reopen,” he said.
For now, Kaplan said, the Fed needs to keep monetary policy accommodative.
But as the economy weathers the pandemic, “we would be well served by weaning off these extraordinary measures as soon as we are able to; I think that will be far healthier. I just can’t predict exactly when that will be - but that will be my, that is my mindset.”
U.S. economic data published on Wednesday showed a surge in retail sales in January and the biggest gain in the producer price index for final demand since December 2009.
For now, the firmer inflation data is “welcome in that it’s consistent with stronger GDP growth and getting to full employment faster (but) we’ve got to monitor it carefully, just to understand how it’s progressing and what the trajectory is, and how much is temporary versus persistent,” he said.
And if President Joe Biden’s administration delivers on a proposed $1.9 trillion pandemic relief package, Kaplan said the economy may grow even faster than the 5% pace he currently has penciled in for this year.
That, he said, will mean a return “to full employment sooner, inflation will firm more than it would have and ... when the time comes, monetary policy needs to adapt to that.”
Kaplan signaled he had more thoughts on that subject, but was not ready to voice them.
“I could be more pointed than I am being with you, but I don’t think it’s appropriate for a public forum,” he said. (Reporting by Ann Saphir Editing by Paul Simao)
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