Fiscal policy will remain important, says Fed official

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    WASHINGTON- Fiscal policy will remain an important economic prop in the United States until the pandemic subsides, Kansas City Federal Reserve President Esther George said on Tuesday, with inflation unlikely to pose a near-term problem even with record levels of public debt.

    George did not comment specifically about the $1.9 trillion spending plan the Biden administration is hoping to push through Congress, but in comments to a real estate symposium she noted how government programs last year kept the economy afloat through the first months of the pandemic.

    It is still needed, she said in comments to a symposium organized by the University of Missouri-Kansas City.

    “Until we get to the point where the virus is in the rearview mirror (fiscal policy) is likely to remain important to economic activity,” George said. “The economy needs a bridge.”

    Once the pandemic eases and consumers can spend freely again, George said the economy may face “price pressures.” – Reuters