Whatever it takes. Former European Central Bank Chairman Mario Draghi popularized the expression during the financial crisis of over a decade ago. Today it is the essence of how Federal Reserve Chairman Jerome Powell is responding to the economic recession caused by COVID-19 pandemic.
The Federal Reserve will continue to provide support to financial markets “as long as those needs arise,” and as long as they are in keeping with federal law, says Fed Chairman Jerome Powell, who spoke Thursday morning on a webinar sponsored by The Brookings Institution. “There is no limit of what we can do as long as it meets the test of law as amended by Dodd-Frank.”
Just 90 minutes earlier the Fed had announced it would provide $2.3 trillion in loans to small businesses and U.S. cities and states and expand a previously announced corporate lending program. This is in addition to multiple lending facilities the central bank has already announced, along with a revised asset purchase program and the slashing of interest rates to zero.
At the beginning of today’s webinar, Powell said the Fed was “doing all we can to help shepherd the economy through a difficult time” and would continue to act “forcefully, proactively and aggressively until we are confident that we are solidly on the road to recovery.”
He emphasized that the Fed’s actions use “lending powers, not spending powers,” which are the realm of Congress, and are only taken “with the consent of the secretary of the Treasury.”
In the Q&A that followed his initial statement, Powell noted that expectations for an economic rebound in the second half of the year depend “on people staying home, staying healthy“ and everyone doing whatever they can to keep the virus under control.
“This is first and foremost a public health crisis, and the most important response is coming from those on the front lines in hospitals, emergency services and care facilities,” said Powell in his prepared remarks.