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Dallas Federal Reserve Bank President Robert Kaplan is expecting strong economic growth in the second half of next year.

He is relying on newly developed COVID-19 vaccines to be rolled out widely.

However, with cases surging now he sees a “very difficult” next three to six months.

Key notes via Reuters

  • Says sees ‘very difficult’ 3-6 months, but optimistic about next 12 months.
  • Could see recovery stalling in december and q1 2021, but strong growth in 2h 2021.
  • Says reluctant to make changes in asset purchases until more visibility on outlook.
  • Open-minded whether Fed should give more guidance on asset purchase plan at Dec. meeting or at later meeting.
  • Says fiscal aid would help limit scarring, speed recovery.

“If we can see the resurgence moderate, I think you’ll continue to see growth in the fourth quarter, and you might even see growth in the first quarter of next year, but right now, the trends at least in the virus don’t look like they are moderating,” Kaplan told Reuters in an interview.

“So we’re bracing ourselves here.”

Fed policymakers are gearing up for their next policy-setting meeting, in mid-December, as hospitalizations set records and some communities are re-imposing restrictions to bring rampant COVID-19 spread under control.

Kaplan said he expects the Fed to continue to discuss such guidance, he’s open-minded about when to deliver it:

“We are going to have to figure out whether it’s in the December meeting or a future meeting,” he said.

The US dollar has not reacted to the comments.