Jerome Powell: ‘We may well be in a recession’

Federal Reserve chairman Jerome Powell today admitted that the U.S. economy may be in recession due to measures to curb the spread of the coronavirus, but said the pandemic needs to be contained before the economy can recover can recover.

“We may be in recession,” the Fed chief said in an interview in NBC’s Today Show. But “there is nothing fundamentally wrong with our economy,” he added. “People are asked to withdraw from economic activity, so if we can control the spread of the virus relatively quickly, economic activity can resume.”

He said he expected “probably a significant decline” in economic activity from April to June, but the recovery could start in the second half of the year. “It is very difficult to say exactly when that will be,” he said. “The virus will set the schedule here.”

Powell highlighted the Fed’s aggressive measures to maintain credit flow in the economy and said the only limit on central bank emergency lending is the extent to which the Treasury provides funds to cover any losses.

The Coronavirus bailout bill contains $ 454 billion for the Treasury Department, a sum Powell has proposed to support more than $ 4 trillion in emergency loans.

These programs are an attempt to intervene temporarily where private investors do not offer loans.

“We won’t run out of ammunition when it comes to lending,” he said. “That will not happen.”

When asked about his message to the American people, Powell said, “The Federal Reserve is working hard to support you now, and our policies will be very important when the recovery comes.”

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