Fed chair Jerome Powell says 'we may well be in a recession'

Darnell Taylor
March 27, 2020

With the COVID-19 pandemic shuttering businesses and forcing consumers to stay home, Federal Reserve Chairman Jerome Powell said Thursday that the country "may well be in a recession" but noted "there can be a good rebound on the other side" of the coronavirus crisis.

Federal Reserve Chairman Jerome Powell mentioned the central bank will care for its muscular efforts to toughen the drift of credit score in the USA financial system as Americans hunker down from the coronavirus pandemic.

A deliberate choice to close stores in the name of public health, Powell said, "is not a typical downturn.There is nothing fundamentally wrong with our economy".

"The first order of business will be to get the spread of the virus under control and then resume economic activity". "Dr Fauci said something like the virus is going to set the timetable, and that sounds right to me", Mr Powell said, in reference to Dr Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases, who is on the White House's coronavirus task force.

President Donald Trump has dangled an Easter deadline - which is April 12 - for American businesses to resume normal operations and to ease the social distancing guidelines put in place to stop the spread of the virus.

When asked if the Fed would run out of ammunition to support the economy, Powell said no.

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"The sooner we get through this period and get the virus under control, the sooner the recovery can come".

Federal Reserve Chairman Jerome Powell appeared on the "TODAY" show with host Savannah Guthrie to discuss the state of the economy and the lengths officials will go to make sure it survives. "We can continue to make loans and really the point of all that is to support the flow of credit in the economy to households and businesses". The regulator has twice cut interest rates this month, bringing them to nearly zero.

Powell shrugged off that criticism, saying the fed doesn't 'let anything else get into our thinking'.

The Fed's ability to lend is somewhat constrained by the amount of capital provided by the US Department of the Treasury to offset any credit losses, Powell said, adding that the central bank can lend US$10 for every US$1 of cash that the department provides.

"We know that economic activity will decline probably substantially in the second quarter", Powell mentioned, including that folks had been deliberately chickening out from commonplace lifestyles to offer protection to their well being. "Just the opposite. We begin with a very strong position". "That just doesn't happen", he said.

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