Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Fed working to bolster credit during 'self-mandated' recession: Kaplan

Published 03/27/2020, 08:38 AM
Updated 03/27/2020, 09:25 AM
© Reuters. Dallas Federal Reserve Bank President Robert Kaplan speaks at the Commonwealth Club in San Francisco

© Reuters. Dallas Federal Reserve Bank President Robert Kaplan speaks at the Commonwealth Club in San Francisco

By Ann Saphir

(Reuters) - A raft of programs from the U.S. central bank and a $2 trillion rescue bill nearing approval in Congress are aimed at providing relief during a "self-mandated" recession "so that when the virus is defeated we can walk, we can run, and then we can sprint out of this," Dallas Federal Reserve bank President Robert Kaplan said on Friday.

But that road to recovery, he signaled in an interview with Bloomberg TV, may be difficult.

Kaplan said he expects U.S. GDP to drop steeply next quarter and the unemployment rate to rise to the low- to mid-teens before falling to around 7% to 8% by year-end. That's about double what the unemployment rate was before the virus struck, and could mean millions of Americans out of work for long periods.

Some small businesses may fold and larger businesses may need to resize, Kaplan said. Meanwhile consumers may emerge from this period more cautious and less inclined to spend money, he said.

"We are going to climb out of this, it's just a question of how fast do we go," he said.

For now, he said, small businesses can expect to be able to borrow money backstopped by the Fed "very quickly" under a new program aimed at bolstering firms hurt by the coronavirus epidemic.

Under the new Main Street lending program, the Fed would likely provide credit support to commercial banks so they can lend to small businesses, he said. "You can be sure that we are working furiously here at the Fed to have this in place and work out the details. And you can have confidence that we are going to do that," he said.

The program is one of several the Fed has rolled out or plans to that are designed to keep credit moving and financial markets functioning as large parts of the U.S. economy shut down to slow the virus' spread.

In a separate interview on Bloomberg TV, Atlanta Fed president Raphael Bostic said he will be looking at consumer confidence to gauge the likely trajectory of the economy.

"Hopefully all the things we are doing today will give people some confidence and that confidence will carry through to the recovery period," Bostic said.

© Reuters. Dallas Federal Reserve Bank President Robert Kaplan speaks at the Commonwealth Club in San Francisco

(Reporting Ann Saphir; Editing by Andrea Ricci)

Latest comments

I guess your smarter than most Brent. What would you do to save us ??
These people need to be dragged out and shot.
Agree
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.