Federal Reserve Chairman Jerome Powell on Thursday vowed that the Fed will aggressively use its extensive lending powers until officials are confident the U.S. is on the road to recovery and said the eventual economic bounceback can be “robust” when it does come.
Mr. Powell said the Fed is leveraging emergency lending powers “to an unprecedented extent” with the consent of the Treasury Department and with recent financial backing from Congress.
“We will continue to use these powers forcefully, proactively, and aggressively until we are confident that we are solidly on the road to recovery,” Mr. Powell said in an online broadcast hosted by the Brookings Institution.
“We acted forcefully to get our markets working again and, as a result, market conditions have generally improved,” he said.
He said the Fed is doing everything it can to shepherd the economy through a difficult time.
“When the spread of the virus is under control, businesses will reopen and people will come back to work,” Mr. Powell said. “There is every reason to believe that the economic rebound, when it comes, can be robust.”
The public comments and reassurances from Mr. Powell were striking and came as the COVID-19 outbreak continues to wreak havoc on the U.S. economy.
Mr. Powell said the U.S. entered the “turbulent period” on strong financial footing.
“People have been asked to put their lives and their livelihoods on hold, at significant economic and personal cost,” he said. “We are moving with alarming speed from 50-year lows in unemployment to what will likely be very high, although temporary, levels.”
He said most people expect that any rebound would happen sometime after the second quarter, which ends June 30.
“To try to be precise about where that would be — I don’t think that would be appropriate,” Mr. Powell said. “I will just say that it does depend on people staying home, staying healthy, doing everything we can to get the virus under control. The more we do that, the sooner it will be safer to go back to work.”
Treasury Secretary Steven T. Mnuchin suggested on Thursday that parts of the economy could be ready to reopen as early as May.
Asked about that time frame, Mr. Powell said it wasn’t the Fed’s call to make.
“We need to have a plan nationally for reopening the economy — we all want it to happen as quickly as possible,” he said. “We all want to avoid a false start where we partially reopen and that results in a spike in coronavirus cases.”
Mr. Powell said the recent $2.2 trillion economic rescue package from Congress is an important step in the recovery and made a reference to additional legislation that was in the works.
Senate Democrats on Thursday blocked quick action on an additional $250 billion for a small business lending program that had been part of the rescue package.
Mr. Powell stressed that the Federal Reserve only has lending powers and doesn’t have the authority to actually allocate money.
He said elected officials are the ones “who use their powers of taxation and spending to make decisions about where we, as a society, should direct our collective resources.”
Mr. Powell pointed out that the Fed has already lowered interest rates to near zero and said they’re committed to keeping rates at that level until they’re confident the economy is on track to recover.
The Treasury Department and the Federal Reserve Board earlier Thursday had also announced new and expanded programs estimated to provide up to $2.3 trillion in new financing to help support American businesses, workers, states, and localities.
Mr. Powell thanked frontline workers in health care, sanitation, and grocery stores for their work during the crisis.
“This is first and foremost a public health crisis, and the most important response is coming from those on the front lines in hospitals, emergency services, and care facilities,” he said.
• David Sherfinski can be reached at dsherfinski@washingtontimes.com.
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