Fiscal stimulus packages 'can't get everything right': Former Vice Chairman of U.S. Federal reserve
U.S. Federal Chairman Jerome Powell said the U.S. central bank was committed to using all its powers “forcefully, pro-actively, and aggressively” to help the country recover from the devastating coronavirus pandemic, even as he hinted at the limits to that authority.
“Many of the programs we are undertaking to support the flow of credit rely on emergency lending powers that are available only in very unusual circumstances,” Powell said in the text of a speech he’s set to deliver at 10 a.m. Thursday via a virtual presentation.
“We will continue to use these powers forcefully, pro-actively, and aggressively until we are confident that we are solidly on the road to recovery,’ he said.
His remarks came soon after the Fed made another slew of announcements on Thursday, rolling out new emergency lending programs and beefing up existing facilities unveiled in recent weeks.
The sweeping package makes as much as US$2.3 trillion in additional aid available, including US$600 billion for companies and US$500 billion to purchase short-term debt directly from state and local governments.
Powell sounded a note of optimism over the recovery he expects to follow once restrictions aimed at containing the virus are lifted.
“When the spread of the virus is under control, businesses will reopen, and people will come back to work,” he said. “There is every reason to believe that the economic rebound, when it comes, can be robust.”
As the Fed broke new ground in deploying emergency measures, Powell took care to draw lines around what he saw as the appropriate role of the central bank as compared to the authority held by elected officials.
“The critical task of delivering financial support directly to those most affected falls to elected officials, who use their powers of taxation and spending to make decisions about where we, as a society, should direct our collective resources,” he said.
Powell returned to that theme later in the speech, emphasizing Fed actions stem from “lending powers, not spending powers.” He then added, “The Fed is not authorized to grant money to particular beneficiaries.”