Powell Says Fed Has "No Limits" on Support for Coronavirus-Hit Economy

Fed won't run out of ammunition to support the economy, Powell insists, but the U.S. likely already in recession from the coronavirus pandemic
Author:
Updated:
Original:

Federal Reserve Chairman Jerome Powell said Thursday that there are no limits to the amount of money the central bank can use to support the economy amid the ongoing coronavirus pandemic. 

Speaking with NBC's 'Today' program, Powell also said the U.S. economy is likely already in recession, but noted that activity could rebound in the second half of the year if the coronavirus spread is quickly brought under control.

"When it comes to lending, we’re not going to run out of ammunition," Powell said. "That doesn’t happen." 

"We have interest rates at zero, but we still have other dimensions we could use to support the economy and we can continue to make loans to support the flow of credit to households and businesses," the Chairman added. 

Powell also said that while the U.S. is likely now in recession, there is "nothing fundamentally wrong" with the economy. 

"We had a 50-year unemployment rate heading into February, so we're starting from a good position," Powell said. "In theory, if we can get the cornavirus under control quickly, economic activity can resume in the second half of the year." 

Earlier this week, the Fed said it would buy an unlimited amount of government debt, as well as corporate and municipal bonds, in the biggest expansion of its balance sheet in history.

The move, which followed its March 15 interest rate decision that took the benchmark Fed Funds rate to a record low range of 0% to 0.25%, marked a massive increase from the $700 billion in announced at the same time. 

It will also add purchases of corporate debt, municipal bonds and other assets as it balance sheet looks set to balloon from its current $4.7 trillion level.

"The Federal Reserve is committed to using its full range of tools to support households, businesses, and the U.S. economy overall in this challenging time," the Fed said. "The coronavirus pandemic is causing tremendous hardship across the United States and around the world. Our nation's first priority is to care for those afflicted and to limit the further spread of the virus."

"It has become clear that our economy will face severe disruptions," the statement added. "Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift recovery once the disruptions abate."