Fed’s Kaplan says economy could shrink again as virus surges

November 19, 2020

(Reuters) – Dallas Federal Reserve Bank President Robert Kaplan on Thursday said the economy’s rebound could stall in the next two quarters, with output possibly shrinking in the fourth quarter, because of the resurgence of the coronavirus.

The Fed is buying $120 billion of bonds each month and should continue doing so, he said, and potentially extend the maturities of its purchases if needed, he said. In addition, he said, it’s “critical” the Fed keeps its emergency lending programs going into next year. They are currently scheduled to expire on Dec. 31.

(Reporting by Ann Saphir)

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