HONG KONG: Asian markets mostly dropped Thursday following a broadly negative lead from Wall Street after the head of the Federal Reserve warned of an “uncertain” outlook for the US economy and stressed the need for fresh stimulus.
While the central bank indicated interest rates were unlikely to begin rising for another three years, allowing businesses to borrow at ultra-low levels, Jerome Powell’s call for more fiscal help came with US lawmakers unable to find common ground on a new package.
Donald Trump also showed some confusion after claiming a vaccine could be available as soon as next month, directly contradicting the head of the Centers for Disease Control and Prevention, who had given a timeline of mid-2021.
Fed boss Powell told reporters that while the recovery was looking better than anticipated, “overall activity remains well below its level before the pandemic and the path ahead remains highly uncertain”.
“It will take a while to get back to the levels of economic activity and employment that prevailed at the beginning of this year,” he said. “My sense is that more fiscal support is likely to be needed.”
Talks on a new rescue bill have been stuck in the mud for weeks, with both sides digging in their heels and swapping the blame, though Democratic House Speaker Nancy Pelosi and White House chief of staff Mark Meadows each made encouraging statements about the potential to break the impasse.
Trump on Wednesday tweeted that Republicans — who last week put forward a $500 billion proposal — should “go for the much higher numbers”, suggesting he is keen to reach an agreement with Democrats, who are aiming for $2 trillion.