By; Jeff Cox - CNBC
Powell says more policy help may be needed to pull the US out of economic downturn
Fed Chairman Jerome Powell said more measures likely will be needed to pull the economy out of its downturn.
He did not specify what those measures will be but pointed to the likely need for more fiscal support from Congress.
“While the economic response has been both timely and appropriately large, it may not be the final chapter,” the central bank chief said in prepared remarks.
Federal Reserve Chairman Jerome Powell said Wednesday that policymakers may have to use additional weapons to pull the country out of an economic mire that has cost at least 20 million jobs and caused “a level of pain that is hard to capture in words.”
While he did not specify what those measures are and where they would come from, Powell said the coronavirus has triggered a situation unlike previous recessions the U.S. has endured, and the response may have to be more from Congress than the Fed.
He noted the unprecedented strength of the fiscal and monetary measures already taken but stressed the importance of making sure that the deepest slump since the Great Depression does not get out of control. The Fed has cut its benchmark rate to near zero and instituted multiple lending and liquidity programs, while Congress has appropriated close to $3 trillion in rescue funding.
“While the economic response has been both timely and appropriately large, it may not be the final chapter, given that the path ahead is both highly uncertain and subject to significant downside risks,” Powell said in prepared remarks for a webcast event with the Peterson Institute for International Economics.
During a question-and-answer session afterward, he said theFed is not considering going to negative interest rates. “The committee’s view on negative rates really has not changed. This is not something that we’re looking at,” Powell said.
“The scope and speed of this downturn are without modern precedent, significantly worse than any recession since World War II. We are seeing a severe decline in economic activity and in employment, and already the job gains of the past decade have been erased,” Powell said.