Neel Kashkari, the head of the Federal Reserve Bank of Minneapolis, told CBS the country is looking at an 18-month strategy of rolling shutdowns to fight the coronavirus outbreak.
“We could have these waves of flare-ups, controls, flare-ups and controls, until we actually get a therapy or a vaccine,” Kashkari said on Face the Nation Sunday. “We need to find ways of getting the people who are healthy, who are at lower risk, back to work and then providing the assistance to those who are most at risk, who are going to need to be quarantined or isolated for the foreseeable future.
“We’re looking around the world. As they relax the economic controls, the virus flares back up again,” Kashkari added.
According to MarketWatch, Kashkari also acknowledged this could be painful for people across the country. Unemployment has skyrocketed in the U.S. over the last month. More than 16 million citizens have been laid off or fired since the outbreak hit the US.
Additionally, the Federal Reserve’s St. Louis district estimated 47 million, or more than 30% of citizens in the U.S., could end up unemployed by the time the outbreak ends. Kashkari also warned that unless a vaccine or effective therapy is developed in the near future, a fast reopening of the government is impossible.
“It’s hard for me to see a V-shaped recovery under that scenario,” Kashkari said.
The federal government has stepped in, passing a $2 trillion response bill, but funds are running dry and another response is currently in the works.
Cleveland Fed Chief Loretta Mester said Friday that the central bank was “likely not done” in seeking ways to keep credit flowing in the economy.
“We’re always looking for things where if we have a tool to be able to do it, and if we think it’s needed, we’re going to do it,” she told an online forum hosted by the City Club of Cleveland.