Federal Reserve Chairman Jerome Powell on Thursday mentioned there may properly be important financial ache within the quick time period in gentle of the coronavirus outbreak however that there additionally might be a “good rebound” on the opposite aspect of the disaster.
“You may well see significant rises in unemployment, significant declines in economic activity, but there can also be a good rebound on the other side of that and that’s actually one of the main things we’re trying to do by assuring the flow of credit in the economy and keeping rates low,” Mr. Powell mentioned on NBC’s “Today” program.
“We may well be in a recession,” he acknowledged, whereas saying there’s nothing essentially incorrect with the economic system and that it carried out properly by way of February.
Mr. Powell did say he’s undecided concerning the actual timeframe for such a bounceback.
“What I’m saying is we don’t know,” he mentioned. “And the sooner we get through this period and get the virus under control, the sooner the recovery can come. We don’t have comparable experiences to go back and look at.”
“We know that economic activity will decline, probably substantially, in the second quarter, but I think many expect and I would expect economic activity to resume and move back up the second half of the year,” he mentioned. “Very hard to say precisely when that will be, and it will really depend on the spread of the virus. The virus is going to dictate the timetable here.”
Earlier this week, the Fed mentioned it could purchase Treasury securities and mortgage-backed securities “in the amounts needed” to help the markets as a part of new emergency measures to attempt to mitigate the monetary results of COVID-19.
“It’s not a blank check in the sense that we are limited by the ability to take losses,” he mentioned. “In certain circumstances like the present, we do have the ability to essentially use our emergency lending authorities and the only limit on that will be how much backstop we get from the Treasury Department.”
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