"While the economic news has been unremittingly awful in recent weeks, financial conditions since the middle of March have eased -- and considerably so in many markets," Clarida said in prepared remarks for a webcast appearance held by the New York Association for Business Economics.
Clarida believed that this easing of financial conditions is, at least in part, a direct consequence of the actions the Fed took in recent weeks to support financial markets.
"Whether it proves to be durable will depend importantly on the course that the coronavirus contagion takes and the duration of the downturn that it causes," he said.
"At a minimum, the easing of financial conditions is buying some time until the economy can begin to recover, growth resumes, and unemployment begins to fall," said the Fed vice chairman.
While there is "extraordinary uncertainty" about both the depth and the duration of the economic downturn, Clarida projected that the U.S. economy will begin to grow starting in the second half of this year.
Clarida also believed that the COVID-19 contagion shock is disinflationary, not inflationary, as the so-called core consumer prices fell 0.45 percent in April, the largest monthly decline since the beginning of the series in 1957.
Noting the central bank will continue to "act forcefully, proactively, and aggressively" to provide critical support to the economy during this challenging time, Clarida said more fiscal spending may be needed as well.
"Direct fiscal support can make a critical difference, not just in helping families and businesses stay afloat in a time of need, but also in sustaining the productive capacity of the economy after we emerge from this downturn," he said.
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