Powell Pledges Aggressive Fed Action -- Update
10 April 2020 - 2:02AM
Dow Jones News
By Nick Timiraos
Federal Reserve Chairman Jerome Powell said the central bank was
aggressively using lending powers reserved for emergencies to
prevent a temporary and indefinite shutdown of commerce from
leading to a collapse of financial markets and the economy.
"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 remarks at an online forum
hosted Thursday by the Brookings Institution in Washington.
But he underscored the limits of those powers, effectively
calling on Congress and the Trump administration to take additional
action to prevent the halt in economic activity aimed at slowing
the spread of the coronavirus from hobbling businesses, states and
cities dealing with unprecedented revenue losses.
Mr. Powell also said the U.S. needed a national plan for
reopening the economy based on the best analysis from health
officials. "We all want it to happen as quickly as possible. We all
want to avoid a false start, " he said.
Congress last month approved a $2 trillion economic rescue
package that included $454 billion in funding from the Treasury to
backstop losses in Fed lending programs.
"I would stress that these are lending powers, not spending
powers" that the Fed is using, said Mr. Powell. While many
borrowers will benefit from the Fed's emergency loans, he said,
"there will also be entities of various kinds that need direct
fiscal support rather than a loan they would struggle to
repay."
Mr. Powell punctuated his call for additional fiscal support by
highlighting how severe economic burdens are falling on low-income
workers and other vulnerable segments of society.
"All of us are affected, but the burdens are falling most
heavily on those least able to carry them," he said. "As a society,
we should do everything we can to provide relief to those who are
suffering for the public good."
The task of delivering financial support "directly to those most
affected falls to elected officials, who use their powers of
taxation and spending to make decisions about where we, as a
society, should direct our collective resources," Mr. Powell said.
He closed his remarks by thanking "the millions on the front lines"
in health care, sanitation, grocery, warehouse and delivery
jobs.
Mr. Powell spoke shortly after the Fed announced a new round of
$2.3 trillion in lending programs to companies of all sizes and to
cities and states, taking the Fed well past its traditional comfort
zone by plunging into credit and fiscal-policy decisions it has
long left to Congress and the executive branch.
Mr. Powell said the Fed would put its emergency tools away "when
the economy is well on its way back to recovery."
The central bank last month cut its short-term benchmark rate to
zero and it has purchased more than $1 trillion in Treasury and
mortgage securities in a few weeks to stabilize core pillars of
U.S. and global financial markets.
A record 7.5 million Americans were receiving unemployment
benefits at the end of March, the Labor Department reported
Thursday. Another 6.6 million had submitted claims in the week
ended April 4
"None of us has the luxury of choosing our challenges," Mr.
Powell said. "Fate and history provide them for us. Our job is to
meet the tests we are presented."
Write to Nick Timiraos at nick.timiraos@wsj.com
(END) Dow Jones Newswires
April 09, 2020 11:47 ET (15:47 GMT)
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