Federal Reserve Chairman Jerome Powell Says US May Already Be In Recession

Daniel Fowler
March 27, 2020

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. "That just doesn't happen", he said.

Still, the Fed chair said the economy's path is largely dependent on the length and severity of the viral outbreak.

Powell did admit he's looking to the second half of the year for the economy to turn back around.

"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. It will really depend on the spread of the virus.

Still, the coronavirus pandemic has presented a unique situation, Powell said.

"We still have policy room in other dimensions to support the economy".

To do its part, the Federal Reserve has taken unprecedented action to bolster the USA economy and smooth markets amid the outbreak. "The sooner we get the virus under control, people will very willingly open back up their businesses and get back to work".

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The Fed has this month taken numerous steps to bolster lending and the economy. The Fed slashed interest rates to near zero, has injected trillions into the financial system, and this week launched unlimited bond-buying and a number of facilities to aid local governments and businesses. By Friday, it will have also purchased almost $1 trillion in Treasury and mortgage securities over the past two weeks.

An economic rescue bill approved by the US Senate early yesterday includes US$425 billion that the department could use to backstop the Fed.

That would allow the Fed to boost its lending programs to an astronomical $4.25 trillion.

"Where credit is not flowing, we have the ability in this unique circumstance to temporarily step in and provide those loans, and we will keep doing that aggressively and forthrightly as we have been", Powell said.

The U.S. central bank chief's remarks are a contrast to the urging by some of President Donald Trump's advisers for a faster reopening. He has complained repeatedly and publicly - in interviews and on his twitter account - when he thinks the central bank doesn't cut interest rates fast enough to stoke the US economy.

His choice of venue - a network morning show when many Americans are homebound and paying close attention - was itself part of a message that seemed meant to prepare people for the dismal economic data to come, counsel patience in any rush back to work, and reassure that the Fed would act "aggressively" to keep firms and families afloat.

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