The U.S. Federal Reserve, which has cut interest rates to zero, is buying bonds to keep financial conditions easy and has opened up a raft of lending programs to backstop large parts of the economy, has plenty of capacity to do more, Dallas Federal Reserve Bank President Robert Kaplan said on Tuesday,
“We have the ability to do additional asset purchases. We’ve got plenty of dry powder,” Kaplan said in an interview with Bloomberg Radio. Kaplan said he expects the U.S. economy to shrink by about 4.5% this year and for unemployment to end 2020 at around 8%. Whether the data actually is better or worse than his forecast, he said, will depend people’s use of masks, testing, and contact tracing.