Testifying Together at Today's Congressional Hearing
Powell: "Let's Do Whatever It Takes" Mnuchin: "Let's Observe the Effects of Existing Measures"
Differences May Arise Over Additional Economic Support Measures
[Asia Economy New York=Correspondent Baek Jong-min] Jerome Powell, Chairman of the U.S. Federal Reserve (Fed), and Steven Mnuchin, U.S. Secretary of the Treasury, will testify together before Congress. This is an opportunity to see whether the two will coordinate to form a plan for rebuilding the U.S. economy or if conflicts will arise.
On the 18th (local time), a day before appearing at the Senate Banking Committee's online hearing, both released their written statements publicly.
Chairman Powell stated, "We will mobilize all the tools at our disposal to support the economy," adding, "The Fed has been entrusted with an important mission and has taken unprecedented measures at a very rapid pace over the past few months."
Bloomberg News predicted that Powell might provide hints about the Main Street lending program (for the real economy), which was prepared with Treasury support, during this testimony.
The Wall Street Journal described this as the Fed preparing the most dangerous measures in its history, since as a central bank, the Fed cannot directly lend to businesses. U.S. media expect lawmakers to focus their questions on Powell regarding issues with support for the real economy.
Powell maintained his outlook that economic recovery would occur in the second half of this year, assuming there is no second wave of the COVID-19 outbreak. In an interview with CBS's "60 Minutes" aired the previous day, he also predicted that if there is no second spread of COVID-19, the economy would gradually recover starting in the second half of this year. In the broadcast on the same day, he emphasized that the Fed could take additional measures to support the recovery and that the government and Congress should also introduce further support measures.
Secretary Mnuchin, in his written statement, also forecasted economic recovery in the second half of the year and expressed hope that a COVID-19 vaccine would be developed quickly to safely return people to their workplaces, but his tone differed from Powell's. While he reported on measures taken so far under the economic support law, he did not mention any additional measures.
The Democratic Party has passed a $3 trillion additional support bill in the House and is pressuring the Senate, but the White House and Treasury Department have taken a negative stance, saying they need to observe the effects of existing measures. President Donald Trump also disparaged the Democrats' bill, calling it "dead on arrival."
Accordingly, in this hearing, it is clear that the Democrats will emphasize the need for additional measures, while Mnuchin and the Republicans will stress their unnecessary nature, leading to a clash. Amid this conflict, what opinions Chairman Powell will present is expected to be a key point of interest in the hearing.
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