Despite the havoc being wreaked on the world by the coronavirus outbreak, Federal Reserve Chair Jerome Powell said Thursday he expects a “robust” economic recovery once the spread of the virus is under control.
Powell noted in an online speech sponsored by the Brookings Institution that the Fed will continue to do all it can to shepherd the economy through this difficult time.
“When the spread of the virus is under control, businesses will reopen, and people will come back to work,” Powell said in prepared remarks. “There is every reason to believe that the economic rebound, when it comes, can be robust.”
The Fed Chair noted that the economy entered this turbulent period on a strong footing, which should help support an eventual recovery.
“In the meantime, we are using our tools to help build a bridge from the solid economic foundation on which we entered this crisis to a position of regained economic strength on the other side,” Powell said.
The remarks by Powell come the same day the Fed announcing additional actions to provide up to $2.3 trillion in loans to support the economy during the ongoing coronavirus pandemic.
The Fed said the funding will assist households and employers of all sizes and bolster the ability of state and local governments to deliver critical services during the coronavirus pandemic.
Powell noted that the Fed is deploying its lending powers to an unprecedented extent but stressed that the central bank wields “lending powers, not spending powers.”
“The Fed is not authorized to grant money to particular beneficiaries,” Powell said. “The Fed can only make secured loans to solvent entities with the expectation that the loans will be fully repaid.”
“In the situation we face today, many borrowers will benefit from these programs, as will the overall economy,” he added. “But there will also be entities of various kinds that need direct fiscal support rather than a loan they would struggle to repay.”
Powell also referenced recent moves to slash interest rates and reiterated the Fed’s commitment to keeping rates at the current near-zero level until the economy has “weathered the storm.”
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