Brainard Fed Director: "Stimulus Policies Needed to Prevent 'K-Shaped Recovery'"

Biden's Possible Treasury Secretary... Emphasizes Need for Economic Stimulus
Stimulus Bill Passage Still Uncertain
Goldman Sachs "Difficult to Pass Before Election Even If Agreed"

[Asia Economy New York=Correspondent Baek Jong-min] Lael Brainard, a Federal Reserve (Fed) board member who is considered a leading candidate for Treasury Secretary if Joe Biden, the Democratic presidential candidate, wins, has emphasized the need for an additional economic stimulus bill.

Lael Brainard Fed Board Member
Photo by Reuters Yonhap News

On the 20th (local time), Brainard said, "The economic recovery after the COVID-19 pandemic still carries high uncertainty and is very uneven." He stressed, "This unevenness will hinder the recovery."

Brainard's remarks are interpreted as concerns about a 'K-shaped' recovery, which refers to economic polarization. He explained, "To turn a K-shaped recovery into a broad and inclusive recovery, more fiscal support is needed along with accommodative monetary policy."

He evaluated the absence of stimulus policies as the most serious risk factor for an economic downturn.

Despite the deadline for negotiations on the stimulus bill proposed by House Speaker Nancy Pelosi passing on the 20th, talks between the White House and the Democratic Party are still ongoing. On the same day, Speaker Pelosi and Treasury Secretary Steven Mnuchin planned to continue negotiations via a phone call.

However, the outlook for negotiations remains uncertain. A day earlier, President Trump again expressed hope for an agreement exceeding the $2.2 trillion Democratic stimulus bill, but Senate Majority Leader Mitch McConnell reportedly warned the White House not to agree to a large-scale stimulus bill with the Democrats.

According to CNBC, investment bank Goldman Sachs predicted in a memo sent to clients that "no bipartisan deal will be reached before the November presidential election." Goldman Sachs also anticipated that even if an agreement is reached, it would be difficult for the bill to pass Congress before the election.