Fed Injects $2800 Trillion Emergency Funds... Powell Says "Zero Interest Rate Maintained Long-Term"

Surge in New Unemployment Benefit Applicants Reaffirms Commitment to Economic Stimulus
Strong Rebound Expected Once COVID-19 Stabilizes

[Asia Economy New York=Correspondent Baek Jong-min] Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), once again emphasized his commitment to supporting the U.S. economy on the 9th (local time). On the same day, the Fed announced it would inject up to $2.3 trillion (2,800 trillion won) in liquidity in response to the COVID-19 pandemic.

Jerome Powell, Chairman of the Fed, is speaking at an online seminar. (Source: Brookings Institution YouTube)

The Fed's move came as the economic situation worsened, with 17 million new unemployment claims over the past three weeks, including 6.6 million last week alone. This demonstrated the Fed's determination not to stop efforts to support the economy even after implementing zero interest rates and quantitative easing (QE).

The Fed's liquidity provision differs from QE or repo market interventions. It is based on $454 billion of Fed loan program support, part of the $2.2 trillion U.S. government stimulus package, providing liquidity roughly ten times that amount. This means the Fed intends to inject funds directly into the real economy.

In a statement, the Fed explained that the measures are "to strengthen the response capabilities of state and local governments and to support businesses and households of all sizes during the coronavirus pandemic."

After announcing the measures, Chairman Powell attended a virtual seminar hosted by the Brookings Institution think tank, stating, "The Fed is doing everything it can to provide a safe haven during this economic crisis," and added, "There is reason to believe the economy will recover strongly if COVID-19 is managed steadily and people return to work."

He also emphasized the intention to maintain zero interest rates for an extended period. Powell said, "We will keep rates at the current level until we are confident that the economy has emerged from this turmoil and can achieve maximum employment and price stability goals."

Amid the Fed's proactive actions, the U.S. stock market is showing an upward trend. As of 11 a.m. on the same day, the Dow Jones Industrial Average was up 1.4% compared to the previous day in the New York stock market.