“We may well be in a recession,” he said. “But I would point to the difference between this and a normal recession. There is nothing fundamentally wrong with our economy. Quite the contrary. We are starting from a very strong position.”
After two rounds of emergency cuts, which brought interest rates to near-zero, the Federal Reserve announced plans to buy more bonds and other types of securities. In a statement, the Fed said there was essentially no limit to how long those programs would be in place.
“It is not a blank check in the sense that we are limited by the ability to take losses,” Powell said, noting the Fed’s emergency lending is dependent on getting a backstop from the Treasury Department. “Effectively, $1 of loss-absorption is worth $10 worth of loans.”
Asked about criticism that the Fed has few resources left to blunt a crisis, because of the breadth of its bond-buying program and how low interest rates are, Powell was adamant he and his colleagues aren’t lacking the tools they need.
“When it comes to lending, we are not going to run out of ammunition,” he said. “That just doesn’t happen.”
Powell’s loudest critic is the president, who has publicly attacked the chairman and his decision-making since his tenure as chairman began. In the interview, Powell stressed the Fed’s independence.
“My colleagues and I here are totally focused on our mission of serving the American people,” he said. “We try to do the absolutely best in a way that is completely nonpolitical and nonpartisan.”
Navy Vet
Article URL : https://www.nbcnews.com/business/markets/we-may-well-be-recession-says-fed-chairman-jerome-powell-n1169291