Mass immunization against COVID-19 could begin as early as mid-2021 – sooner than policymakers and market participants expect. And when it does, the US economy will be off to the reopening races. Policymakers could be slow to reduce support, which would see the curve steepen and equity markets sell off. Consequently, the Fed could face an uncomfortable choice between inflation stabilization and financial stability.
What if mass immunization started tomorrow?
Rather than the disease itself, it has been policies intended to slow the spread of the epidemic and contain public panic that have caused the COVID-19 downturn. Yet both government-mandated business restrictions and public panic will cease with mass immunization, and a fast return to economic normality could follow...
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