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Philadelphia — Patrick T. Harker, president and CEO of the Federal Reserve Bank of Philadelphia, told a virtual audience at the Women in Housing and Finance Policy Luncheon that as COVID-19 recedes, the economy is strengthening. He predicted 7 percent national GDP growth in 2021 and inflation close to 3 percent. However, Harker cautioned that vaccine hesitancy and novel COVID-19 variants presented a downside risk to the recovery, and that fiscal and monetary accommodation present an upside risk on inflation.

Harker also described research from the Philadelphia Fed on mortgage forbearance. Noting that 2.2 million households remain in forbearance and that the program will soon be expiring, he presented research suggesting that reducing payments on these loans by 20 or 30 percent would cost lenders $1.5 billion and $4.5 billion, respectively. “The upshot? Only a fraction of the costs of broader government-assistance programs enacted in 2020 and 2021 could keep distressed borrowers in their homes. That strikes me as something worth thinking hard about,” he said.