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Fed will continue to act 'forcefully, proactively and aggressively,' Powell says

Published 04/09/2020, 10:08 AM
Updated 04/09/2020, 10:10 AM
© Reuters. FILE PHOTO: U.S. Federal Reserve Chairman Jerome Powell  speaks in Washington

© Reuters. FILE PHOTO: U.S. Federal Reserve Chairman Jerome Powell  speaks in Washington

By Lindsay Dunsmuir and Ann Saphir

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 rebound from the harm caused by the novel coronavirus outbreak, Fed Chair Jerome Powell said on Thursday, even as he acknowledged the limits of the central bank's powers.

"Many of the programs we are undertaking to support the flow of credit rely on emergency lending powers ... We will continue to use these powers forcefully, proactively, and aggressively until we are confident 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 think the economic recovery, when it comes, would be "robust," noting that the strength of the economy before the outbreak shut down large parts of the country should support a firm rebound.

Since early March, the U.S. central bank has launched an historic economic rescue plan in a bid to blunt the impact of the virus. Policymakers have slashed interest rates to near zero, resumed large-scale asset purchases and rolled out an array of programs to stabilize financial markets.

Powell said the Fed's emergency tools would only be retired once "private markets and institutions are once again able to perform their vital functions" but reiterated that the Fed is a lending, not spending institution.

"The critical task of delivering financial support directly to those most affected falls to elected officials," he said. "There will also be entities of various kinds that need direct fiscal support rather than a loan they would struggle to repay."

Congress passed a $2.3 trillion rescue package late last month to deliver cash to households, and grants and loans to businesses. A second wave of help is currently being considered.

Earlier on Thursday, the Fed launched a broad, $2.3 trillion effort to bolster local governments and small and mid-sized businesses in its latest move to reduce the economic harm faced by the world's largest economy.

The central bank has pledged a "whatever-it-takes" approach to keep credit flowing to businesses and households, with more than 95% of Americans under "stay-at-home" or "shelter-in-place" orders. The United States has the world's highest number of confirmed cases of COVID-19, the respiratory disease caused by the coronavirus.

The number of Americans seeking unemployment benefits in the last three weeks topped 15 million, Labor Department data released on Thursday showed, and Fed policymakers expect a sharp contraction in economic growth for the second quarter.

© Reuters. FILE PHOTO: U.S. Federal Reserve Chairman Jerome Powell  speaks in Washington

"We are moving with alarming speed from 50-year lows in unemployment to what will likely be very high, although temporary, levels," Powell said. "As a society, we should do everything we can to provide relief to those who are suffering for the public good."

Latest comments

OMG. I did not think the system was sooo screwed up. Now they have leverage up on junk as well. Be far the largest hedgefund in the world now. And how are they going to get out of this again ????
Powell for president!
Pump it uncle Powell, lets see where this is ending...
....we have no money this is all putting it in the governments credit card.
all in one phrase: print money
Need more heroin.
Paul Volcker is rolling in his grave ..
....we have no money this is all putting it in the governments credit card.
JP is going to destroy the economy with debt on debt bailout. See you guys at the soup line with $10 per slice of bread.
ya he is even worse than bernanke. i am shock too. print until gone crazy.
The US is now a banana republic.  This all amounts to price fixing as the Fed and Treasury and Investment Banks collude to make the rich richer all under the guise of helping the citizens.  Every dollar they give to the people they take 2 dollars off the top for themselves.
People never renember or complain about the last guy who created hyperinflation do they
Fed Chair Jerome Powell has no shame!!! You will be remembered forever in US history.
He's just the puppet.
The inconvenient and therefore unstated assumption is that the virus will disappear in 6-9 months, so that money lent to businesses that has no revenue today will help them muddle through, keeping people employed to do nothing. it's a dangerous gamble,
the FED works for Trump not US residents. The mountain of debt will be the burden of the next generatons. This funds will get stuck in the big companies. nothing will get to the people who needs it.
$10 trillion on the Fed's balance sheet by year's end. Now backing junk bonds.
no bail outs..cease and desist. Im giving a citizens order.
for what? for *****hand of IBs?plz wait for real downturn comes
ventilator money washing scheme to states and big auto
it was treason before corona..the liqudity pump up and now even more..crooks cronies..banks washing money for 5 percent and then repackage and sell back to fed depository..what is that? a play right out of bad mortgage package loans..wake up world.
There goes my short term puts
right there with ya.
who know name of company who produce ink? how many ton of ink that Fed need?
Meanwhile, ink producing giants can't keep up with supply needs for the fed to keep printing money, give me a break.
The credit rating for the US is going to crash and burn.
I learned my lesson, dont go against liquidity. Fed will pump another 10 trillion $ or more before its all over. Or even more..
What does you mean?
It's like a twilight zone. Economy is in depression, market goes up on horrible news job news. Millions of unemployed in the matter of 3 weeks.
Spoiler alert! This episode ends in stagflation and downgrades in US debt.
absolutely RIIIGGGED
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