Fed is ‘not going to run out of ammunition,’ Powell vows
Federal Reserve Chairman Jerome Powell said the central bank will maintain its muscular efforts to support the flow of credit in the U.S. economy as Americans hunker down from the coronavirus pandemic.
“We will keep doing that aggressively and forthrightly, as we have been,” Powell said in a rare interview on NBC’s “Today” show Thursday. “When it comes to this lending we’re not going to run out of ammunition. That doesn’t happen.”
Over the past three weeks, the U.S. central bank has introduced an unprecedented series of measures, pushing it deep into uncharted territory as it seeks to cushion the blow of the coronavirus on financial markets and the U.S. economy.
The steps include massive bond purchases, emergency facilities to bolster credit markets, actions with foreign central banks to ease the supply of dollars worldwide, and programs for lending directly to American businesses.
“We know that economic activity will decline probably substantially in the second quarter,” Powell said, adding that people were intentionally withdrawing from normal life to protect their health.
That might mean the U.S. entering a recession, the Fed chief conceded, but argued it would be temporary.
“At a certain point we will get the spread of the virus under control and at that time confidence will return,” Powell said, predicting “a good rebound” once the health emergency is over.
The appearance on the popular morning show as many Americans are stuck in their homes marks the Fed chief’s first public remarks since he held an unusual Sunday evening press briefing by teleconference on March 15 to announce the central bank had slashed interest rates to almost zero.
Public communication for Fed chairs has for decades been carefully choreographed, given the weight that even subtle signals can carry for investors.
Ben Bernanke, who led the Fed during the financial crisis, made his own rare appearance in a televised interview on CBS’s “60 Minutes” program in March 2009. Former Fed Chairman Alan Greenspan curbed on-the-record interviews with the press after his 1987 appearance on ABC’s “This Week with David Brinkley” caused stocks to drop.