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Federal Reserve Chairman Jerome Powell said Thursday he thinks there can be a "robust" economic rebound from the coronavirus pandemic, even as increasingly strict containment measures force American life to come to a grinding halt.
Speaking during a webinar for the Brookings Institute, Powell said policymakers at the U.S. central bank are committed to using the full scope of their vast powers to support the flow of cash to businesses, households and state and local governments by opening new lending facilities and holding interest rates near zero until the crisis begins to recede.
“We will continue to use these powers forcefully, proactively, and aggressively until we are confident that we are solidly on the road to recovery,” he said in prepared remarks.
Powell's comments came the same morning that the Fed announced a new $2.3 trillion financing initiative aimed at supporting businesses of all sizes, as well as state and local governments.
“At the Fed, we are doing all we can to help shepherd the economy through this difficult time,” Powell said. “When the spread of the virus is under control, businesses will reopen, and people will come back to work. There is every reason to believe that the economic rebound, when it comes, can be robust.”
Still, Powell stressed the limits of the Fed's powers, directing Americans seeking immediate relief to the $2.2 trillion CARES Act signed by President Trump at the end of March. In addition to including a one-time cash payment of up to $1,200 for individuals who earn less than $99,000, it broadened unemployment benefits by up to $600 per week for up to four months.
He also seemingly called on Congress and Trump to take additional action to address the economic fallout from the virus, which has all but paralyzed business in the country.
"I would see that as more likely than not to be needed," he said.
The Labor Department's weekly jobless claims report released on Thursday contained more grim news for the economy. Last week, 6.6 million Americans filed for unemployment benefits, bringing the number of applications for the last three weeks to more than 16 million, a stunning sign of the damage inflicted by the virus.
Economists have forecast a sharp contraction in GDP in the second quarter, including Powell, who acknowledged that it will be a "very weak" period of growth.
Still, he observed that prior to the pandemic, the economy -- which had been in the midst of a record 11-year expansion -- was healthy.
“We entered this turbulent period on a strong economic footing and that should help support the recovery,” he said.