Fed will continue to act “forcefully, proactively and aggressively,” says Powell
WASHINGTON / SAN FRANCISCO (Reuters) – The Federal Reserve will continue to use all the tools at its disposal until the U.S. economy begins to fully recover from the damage caused by the novel coronavirus outbreak, the president said on Thursday of the Fed, Jerome Powell, even as he recognized the limits of the powers of the central bank.
“Many of the programs we undertake to support the flow of credit rely on emergency lending powers… We will continue to use those powers forcefully, proactively and aggressively until we are satisfied that we are solidly on. the road to recovery, ”Powell said in prepared remarks for an online event hosted by the Brookings Institution.
Powell said there was every reason to believe the economic recovery, when it did occur, would be “robust,” noting that the strength of the economy before the epidemic closed in large parts of the country should support a firm rebound.
Since early March, the US central bank has launched a historic economic bailout in an attempt to mitigate the impact of the virus. Policymakers have cut interest rates to near zero, resumed large-scale asset purchases and implemented a series of programs to stabilize financial markets.
Powell said the Fed’s emergency tools would only be withdrawn when “markets and private institutions are once again able to perform their vital functions,” but reiterated that the Fed is a lending institution and not a lending institution. expenses.
“The crucial task of providing financial support directly to those most affected lies with elected officials,” he said. “There will also be entities of various types that will need direct tax support rather than a loan that they would have difficulty repaying.”
Congress passed a $ 2.3 trillion bailout late last month to provide cash to households, as well as grants and loans to businesses. A second wave of aid is currently being considered.
Earlier Thursday, the Fed launched a massive $ 2.3 trillion effort to support local governments and small and medium-sized businesses in its latest move to reduce the economic damage facing the world’s largest economy.
The central bank has pledged to take an ‘whatever it takes’ approach to sustaining credit to businesses and households, with over 95% of Americans under orders to ‘stay home’ or ‘safe haven’. on the spot “. The United States has the world’s largest number of confirmed cases of COVID-19, the respiratory disease caused by the coronavirus.
The number of Americans claiming unemployment benefits in the past three weeks has surpassed 15 million, Labor Department data showed Thursday, and Fed policymakers expect economic growth to contract sharply for the second trimester.
“We are moving at an alarming rate from the lowest level of unemployment in 50 years to probably very high, albeit temporary, levels,” said Powell. “As a society, we must do all we can to provide relief to those who suffer for the public good. “
Reporting by Lindsay Dunsmuir and Ann Saphir; Editing by Paul Simao