Fed's Powell says US economy may already be in a recession

Powell promised the central bank would use its full firepower to bolster the economy

Federal Reserve Chairman Jerome Powell said Thursday the U.S. economy may already be in a recession as the coronavirus pandemic forces unprecedented shutdowns across the nation — but suggested there could be a "solid rebound" once the virus is contained.

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"We may well be in a recession," Powell said during a rare televised interview on the "Today" show. "There's nothing fundamentally wrong with our economy, quite the contrary. In principle, if we get the virus under control, economic activity can resume, and we want to make that rebound as vigorous as possible."

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The U.S. central bank, facing an economic threat that Powell said is like no other, has unleashed its full firepower to support the economy, including slashing interest rates to near-zero, purchasing an unlimited amount of Treasurys (a practice known as quantitative easing) and launching crisis-era lending facilities to ensure that credit flows to households and businesses.

“When it comes to this lending, we’re not going to run out of ammunition, that doesn’t happen,” Powell said. “We still have policy room in other dimensions to support the economy.”

Powell said many of the initiatives will be used to support the economy's eventual recovery and directed Americans to the Senate's $2 trillion stimulus plan for immediate relief. One of the key tenets of the proposal, the largest relief package in recent memory, is up to $1,200 cash checks for adults earning less than $99,000 annually.

With the U.S. economy essentially coming to a grinding halt in an effort to mitigate the spread of COVID-19 — large swaths of the country have been forced to shut down, and more than 100 million people directed by their county or state governments to stay at home — the disease spread by the novel coronavirus, Powell noted that it's not a normal downturn.

The head of the central bank said that the virus will dictate the recovery time-table, but warned that economic activity will decline, "probably substantially," in the second quarter of the year.

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President Trump has pushed for some of the economy to reopen by Easter, which falls on April 12 this year, but Powell did not provide a timeframe that he thinks is appropriate.

“We’re not experts in pandemics over here. We don’t get to make that decision. I would say that we would tend to listen to the experts,” Powell said. “Dr. Fauci said the virus is going to set the timetable. That sounds right to me,” he added, referring to Dr. Anthony Fauci, the nation's top infectious disease expert and a member of the White House's coronavirus task force.

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