I support the extension of the Fed’s emergency lending efforts

The member of the Federal Reserve Board, Kaplan, said he supports the extension of the Fed’s emergency lending efforts that target major businesses and offer support to displaced workers, in comments made to the Wall Street Journal. Kaplan said it will be time to cut back on bond purchases when the economy is clearly recovering, before reiterating that more (fiscal) help from the government would be welcome.

On the short-term economic outlook, Kaplan said that while the first quarter will likely bring flat economic activity to a slight decline, he still expects a solid year overall and suggested that inflation could pick up as the economy recovers. However, he warned that broader, longer-term trends in the economy tied in large part to technology could stem any jump in price pressures.

Market reaction

The Dollar Index (DXY) continues to trade just above the 90.00 level, with markets predominantly focused on 1) the Brexit negotiations over the weekend and 2) the US fiscal stimulus negotiations, which according to Senator Thune’s latest comments , they are unlikely to culminate in a deal on Friday, but it could come Sunday.

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