Fed's Rosengren says the subsequent 6 months will likely be "fairly uneven" regardless of the vaccine information
A United States Postal Service (USPS) employee works in the rain in Manhattan during the coronavirus disease (COVID-19) outbreak in New York on April 13, 2020.
Andrew Kelly | Reuters
LONDON – The next six months will remain turbulent as the global economy continues to grapple with the impact of the coronavirus pandemic, Eric Rosengren, president of the Boston Federal Reserve Bank, told CNBC.
Pfizer and BioNTech said Monday that their Covid-19 vaccine is more than 90% effective at preventing the infectious disease. Her announcement took the health and investment communities by surprise given the above-expected rate of effectiveness and fueled optimism that the pandemic could be overcome sooner rather than later.
However, Rosengren believes the vaccine will take time to distribute.
"Although there is very good news about the vaccine and the effectiveness of the vaccine appears to be much higher than expected, it will still be difficult to spread and it is still open how many people will be vaccinated voluntarily," Rosengren told CNBC's Joumanna Bercetche during the UBS European Conference.
"While this is certainly good news and my own forecast for the second half of the year (2021) would assume it would be widespread enough by then, should we see very robust growth given our fiscal and monetary policies, I think that the next six months will continue to be pretty restless, "he added.
The Federal Reserve estimated in September that the US economy would contract between 3% and 4% this year, followed by a rebound between 3.6% and 4.7% in 2021.
Economic performance, however, will depend on how much monetary and fiscal stimulus is used, and there are question marks as to how much economic aid US lawmakers will provide and when that could be agreed.
"In the United States, it is less clear what fiscal policy will be," said Rosengren.
One of the troubles is the recent U.S. presidential election: the ballot papers are still being counted, and despite the planned victory for Joe Biden, President Trump has not yet recognized the result. Any new incentive would have to be approved by the US Congress.
"I would hope we get another financial package, it probably won't come as soon as we hoped and that means we won't have as robust growth as we do over the next few quarters." I hope, "said Rosengren.
He also warned that without tax aid and without a quick distribution of the vaccine, there could be more company closures and unemployment.
"How much fiscal policy we need depends in part on how quickly we can get the vaccine widely available," he said.