Fed’s Kashkari: US has a lot of debt capacity, government spending has been wise

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The United States has a lot of debt capacity and government spending in response to the coronavirus crisis has been wise, Minneapolis Federal Reserve President Neel Kashkari said on Thursday, as reported by Reuters.

Additional takeaways

“Both parties recognize the value of an independent Fed.”

“I don’t think debt capacity is unlimited; eventually, it will show up in inflation.”

“If higher government debt resulted in inflation, the Fed would need to tap brakes but I don’t see that in the immediate future.”

“In the time of a national crisis, it’s better to err on the side of being generous in fiscal aid.”

Market reaction

These comments were largely ignored by the market participants and the US Dollar Index was last seen losing 0.38% on a daily basis at 92.07.

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