Emphasis on the Need for Additional Fiscal and Tax Policies at the Parliamentary Level
Trump's Claim on Negative Interest Rates Firmly Rejected
[Asia Economy New York=Special Correspondent Baek Jong-min] Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), described the recession and unemployment situation caused by the novel coronavirus disease (COVID-19) as "beyond words" and mentioned that further policy responses are necessary. He firmly stated that the Fed is not considering negative interest rates, which were mentioned by President Donald Trump.
According to CNBC and other broadcasts, Chairman Powell made these remarks on the morning of the 13th (local time) during a virtual meeting hosted by the Peterson Institute for International Economics.
On that day, Powell said, "The economic response (to COVID-19) has been appropriate and sufficiently large, but this cannot be the final chapter."
Although the Fed lowered interest rates to near zero and the U.S. government and Congress introduced a $3 trillion stimulus package, this implies that it will be difficult to escape the recession caused by COVID-19 with these measures alone.
He stated that while the Fed will continue to use all available tools to stabilize the economy and financial markets, the biggest measures must come from Congress.
Powell said, "Additional fiscal support may be costly, but if it can avoid long-term economic damage and achieve a greater recovery, it is worth it," attributing this responsibility to elected representatives and passing the ball to Congress.
He also made it clear that there is no intention to introduce negative interest rates. Powell emphasized, "The Fed is not considering negative interest rates. Our view on negative interest rates will not change. This is not something we are looking at." This was a response to President Trump’s tweet the day before, in which he argued that the Fed should introduce negative interest rates.
Regarding future economic prospects, he estimated that they could vary depending on the response to COVID-19. He mentioned, "Whether the economy recovers depends on how long it takes for a treatment for COVID-19 to emerge and whether a second wave of infections occurs after economic activities resume." On the timing of economic recovery, he answered, "Since we do not know the answer at this time, policy responses are needed to address various possible outcomes."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
