(Reuters) – Reports measuring U.S. economic activity are likely to be “very bad” in the first half and the unemployment rate could rise above 10% due to efforts to slow the spread of the coronavirus, Cleveland Federal Reserve Bank President Loretta Mester said on Tuesday.
Efforts to contain the outbreak by telling Americans to stay at home is causing pain for businesses and consumers, Mester said in an interview on CNBC.
“I expect to see some very bad numbers coming out of the economy in the first quarter, second quarter,” Mester said in the interview.
“We’re going to see some businesses and people really need our help,” she said.
The Fed has gone into overdrive to try to keep the U.S. economy from suffering lasting damage from the coronavirus pandemic, slashing rates to zero and rolling out new efforts almost weekly, including relaunching large-scale asset purchases and reviving several liquidity tools.
Mester said she did not regret voting against the last rate cut, which brought rates down to near zero. She said her emphasis at the time was on making sure the Fed was doing enough to shore up financial markets.
The timeline for resuming normal economic activity will depend on the healthcare system and the success of social distancing and other efforts to contain the outbreak, she said.
“How things play out really are going to depend on the course of the virus,” Mester said.
In the meantime, the Fed is doing what it can to support markets and to set up the economy for a strong recovery after the virus is contained, she said.
(Reporting by Jonnelle Marte and Kanishka Singh; Editing by Chris Reese and Sonya Hepinstall)