Federal Reserve's Kaplan downgrades 2021 GDP forecast, sticks to taper call

[BENGALURU] Dallas Federal Reserve President Robert Kaplan said on Wednesday he cut his forecast for US GDP growth this year due to the resurgence of Covid-19, but reiterated his support for starting to taper the Fed's asset purchases in October as long as there is no fundamental change to the outlook.

"Fear of infection is having an impact," Mr Kaplan said at a Dallas Fed Town Hall, forecasting slower hiring in September and a dent to demand in the third quarter, but no "prolonged" effect.

This year the US economy will probably grow 6 per cent, he said, shy of the 6.5 per cent pace he earlier forecast but so far not fundamentally different.

REUTERS