Transcripts For CSPAN Federal Reserve Chair Powell Holds New

CSPAN Federal Reserve Chair Powell Holds News Conference On Monetary Policy July 13, 2024

Lendfaction, and we cannot insolvent companies it is clear these are lending bound to implement the laws that Congress Gives us. We cant make grants. That in my raised remarks is that i just want to be clear on that. Ou know, we can do what we can do and we will do it to the absolute limit of those powers. It. L keep at and you i just want people to know that we will be at it with that we authorities have until we get through this thing. We will keep using our authorities. Ut there are authorities that we dont have and there may be a need for those authorities to be used as well as ours. Powell. Hair its heather long from the washington post. I have two questions for you. Timing. Do you plan to launch the corporate facility and main lending facilities in may, early may, anything you can timing . A sense on second in a statement you referred to the fmoca refers to medium term risks from the pandemic. Think unds like you all this is going to be a long recovery, a long road to recovery. Can you give us guidance on how you see this recovery taking shape . Powell sure. The facilities, the corporate facilities are near being operating,nd will be i would say, soon, fairly soon. Facility is were close to announcing to issuing a sheet. M as you know we put out a term sheet for comment a while back thousand a couple comments. We carefully study them. We tried to reflect those in now. Were doing i think with main street, there different ouple of kinds of lending going on this. Is a broad area of the economy with many different kinds of credit needs so were for some eep at that time, i think adding in sectors and lending products. At well be probably be continuing to work and expand main street for some time. Be done quite as quickly, but the first part i think will be done fairly quickly. Of our statement so what we said was that we ill sentence. The Ongoing Public Health crisis d near term and poses onsiderable risks over the medium term. What we mean by the medium term, not were talking about is right now in the very near term. Ts between now and the long term. The next year or so. Id point to a couple of risks outlook what we were of. King first, just the virus. How long will it take to get it under control . Be other outbreaks . Ill there be drugs or a vaccine . Everything is shrouded in uncertainty. The second issue and this is one is tantial of damage ssibility to the productive capacity of the economy. Through a couple of channels. Is workers. If one is unemployment for an person can iod, the lose the skills that are needed, lose touch with the labor force restarting ficulty his or her career. Thats a feature of deep and long recessions. Got to s something we watch out for. Another is just businesses. Ou know, these thousands of great medium and smallsized businesses we have all over the country, theyre worth so much the economy than the sum of their net assets. Theyre job creators. Theyre really important. If we see an unnecessary wave ssary insolvency, a of those, that could be damaging to the performance of the time. Y over the good news is we have policies, as i mentioned in my remarks, we have policies that things. Ess those but not perfectly. So thats another risk. To third thing i would point is just the global dimension. None s a very global if i none and were phenomenon, Economic Data g from around the globe which is very, very negative and that, on u. S. Economic performance over time. U. S. On on the the u. S. Economy, there are things you can say. Say the first in the near term were going to see, you know, significant declines Economic Activity, significant declines in employment, increases in unemployment. To see that as a consequence of the virus and the measures were taking to protect it. Elves from the next phases are more uncertain, highly uncertain, but we will go through a phase starting fairly soon where we economy. Reopen the probably the Economic Activity will pick up, as consumer up. Ding picks Consumer Spending has gone down quite a lot. As people start to return to their normal patterns of spending. But the chances are that it go right back to where we were because people will, until that the virusnt is well and truly under control, hen they will be somewhat probably reluctant to undertake certain kinds of activity. Us to take some time for get back. It probably will take some time more to get back to a normal level of unemployment and maximum y the unemployment. James. James thanks, chair powell. You didnt firm up your guidance on this is james from the financial times. Your guidancem up on Interest Rates. Iven the things you outlined, under what circumstances would you strengthen the feds commitment to keep rates at the bound . Is there any danger to delaying that pledge . What credit facility, kind of demand are you expecting for the programs that were set under the cares act and are you expecting them to rapidly like the p. P. P. Did . Chair powell first, as i mentioned, we moved very quickly, very aggressively. First to return to effective lower bound, where we are now. There essentially right away. We think thats the right place to be. If you look atsur vase. If you if you look at if you look at market prices, they expect us to be while. Or a its not as though the market is offering a lift off that. To me say, we are not going e any hurry to wait and lift off. Well wait until were confident the economy is well on the road to recovery. See our current stance, our current guidance, and i would thing with asset purchases. We see them as appropriate. Ive also mentioned now a couple a lot oft we have done thinking about what monetary olicy might look like overcoming months and that would, you know, depend on where range of potential economic scenarios. All re thinking about that the time, but right now for now we think our current stance is appropriate. Made no change in it today. Question was the thing facilities is treasury of equity. Lenty so weve said that if demand for facilities is greater than well stimated, then expand them and we have the ability to do that. The way the Paycheck Protection Program is where specific amount allocated, appropriated for it, and then theres no more money. That will be unlikely to happen unless we exhaust treasurys we are a long way from doing that. The second thing i would say, we ve seen that, when announced these facilities, i mentioned this in my remarks, its not just the actual lending we do. The we build confidence in the market. Market participants come in and Many Companies that would have to come to the fed have now to finance themselves privately since we announced the sheet on these facilities. So thats a good thing. Companies are out there financi financing. Theyre out there raising liquidity. We have not made any corporate facilities. Se we made the shortterm money market loans, but we havent them. Ny of theres a tremendous amount of financing going on and thats a good thing. Or that reason, the ultimate demand for the facilities is uite difficult to predict because there is this announcement effect that really gets the market functioning again. To follow we have through, though, and we will ollow through to validate that announcement effect. Howard schneider. Howard hi, chair powell, and thanks for doing this. To get your expansion on timing of recovery and the the health etween response. You said earlier, i think you of the yearond half could be a robust rebound. Question . W out of the do you think a steady recovery is possible until a vaccines patchwork given the of measures we see taken around he states, is that going to vaccine . O absent a chair powell as you know, economic forecasts are unserb. Theyre uncertain. Today theyre usually uncertain because so much of the of the economy depends on the path of the virus and the measures we take to ontrol it, our success in reopening the economy and also the time it takes to develop new drugs. We do tools, the things dont affect any of those things. Were not experts on those things either. The experts tell us is the outcomes are highly uncertain. Is an unusual new kind of uncertainty added on top of our regular uncertainty. I will say, i think there are a few things you can say about the ahead. First, this time now is going to sharp contraction in Economic Activity, high nemployment, personal consumption expenditures have declined sharply. Investment as well. Unemployment moved up. Were going to see Economic Data for the Second Quarter thats any data weve seen for the economy and they are a of the onsequence disease and the measures were taking to protect ourselves from. Hen, well enter this new phase, and well were just eginning to do that where formal measures that require social distancing will be rolled gradually and at different paces and at different parts of country. In time this during this period, the economy will begin to recover. Their will come out of homes, start to spend again. Well see unemployment go down. Well see Economic Activity pick up. And, you know, when will that be . Say. Very hard to lets say for this purpose that its in the third quarter. Earlier, that could be a fairly, you know, large increase. Size of the fall, the increase could also be substantially large. Unlikely it would bring us quickly, quickly all he way back to precrisis levels. Of course, this is the period as well that carries the risks of new outbreaks of the virus, really want to avoid. I think then, after that period, will have, youou know, the kind of formal social istancing measures will be gone. But youll still be left with probably a level of caution on who will f people worry and probably keep worrying for some time. You would think behavioral change, as people gain confidence. We get the virus under control, the sooner people that confidence and regain their Economic Activity. Think trying to be precise when that might happen and what he numbers might look like, i think its very tough to do that. Steve matthews. Teve Steve Matthews with bloomberg. Chairman powell, you noted a number of times over the last ear that theres been a broadening out of job gains with people ized workers, have been left out of the ecovery over the 10year period. Finally making job gains and particularly minorities but also workers. R do you worry that this recession hardest on fall those workers who struggled and in the last gains year or two and that it may take now before there are opportunities for them again . Powell yes, thats about. What i worry so unemployment has tended to go p much faster for minorities and for others who tend to be at he low end of the income spectrum and it tends to come down faster as well but it tends to go up faster and be much, higher. And we were in a place only two well into e were beginning the second half of the we were. Is where every reason to think it was ngoing, we were hearing from minority low and moderate income and minority incomes that market wee best labor have seen in their lifetime. All the data supported that as well. Frankly, to aking, see that all threatened now. Need for our urgent response and also that of ongress, which has been urgent and large, to do what we can to run damage to the economy which is what i earlier. Exogenous event. It happened to us. It wasnt because there was omething wrong with the economy. I think it is it is important can to do everything we avoid that longer run damage and try to get back to where we were i do very much have that concern. Think everyone is suffering here, but i think those who are least able to bear it are the are losing their jobs and losing their incomes and little cushion to protect times like that. O, yes, thats a very big concern. Victoria. Hi. Oria victoria with politico. The Paycheck Protection Program experienced logistical problems because of the speed of which this is happening. Or the main Street Lending facilities, which will also work through banks, what lessons are that . King away from and then, more broadly, you this year, rlier nsustainable task, and i was wondering for republicans that are starting to get worried how much fiscal spending theyre crisis, you in this know, whether that should be a concern for them . Powell so a couple things. From the fferent p. P. P. , paycheck protection ways. M, in two one, these are not grants. These are loans. So i dont know that the demand quite as strong as it has been for the p. P. P. That. T know and the second thing is, we wont run out of money. Pot. Not a limited so there wont be this incentive to try to get there first and thing. Rt of im hopeful we will very much to learn as much as possible from that facility and from all the other ones, too. We have a lot to learn here. Well certainly be trying to do that. Terms of fiscal concerns for many years, ive been the bed, i have long time een an advocate for the need for the United States to return to a sustainable path, from a perspective at the federal level. We have not been on such a path for sometime which just means is growing faster than the economy. This is not the time to act on concerns. This is the time to use the great fiscal power of the united do what we can to support the economy and try to et through this with as little damage to the longer run productive capacity of the economy as possible. Again, and l come, reasonably soon, i think, where we can where we can think longterm way to get our fiscal house in order and we absolutely need to do that. Is not the time to be in my personal view, this the time to let that concern, which is a very serious in ern, but to let that get the way of us winning this really. Edward lawrence. Chairman. Ank you, mr. Fox bissonette work. Given the stimulus on the side, how much weight from clearing the uncertainty you talked about on treatment and whatnot for the reserve pulling back on some of the feds actions and zero g the rates from the lower bound . Also, when does that main treet Lending Facility get deployed . You talk about soon. Now. Businesses are in need thank you. Chair powell you know, so we were not in position a reliable know, assessment on when a vaccine or a therapeutic drug will be ready. To set our going policies based on our estimate of that. Going to just provide the support that we can with the tools that we have. And were going to keep doing until the recovery is well under way. Street, so, you know the sorry. We put our term sheet. A lot of comments. We took those very much to heart. Time nt a great deal of here. Its a challenging space because its many different kinds of borrowers. Have different needs, different sizes of companies, and so were as i mentioned, close to announcing a new term sheet which will then quickly. Erative fairly my guess is well keep looking to add products and add ifferent kinds of borrowers to that as we go. Were well aware of the importance of doing it as possible. We hear you know, were very with the urgency of that need. Ok. Lee. Don its don lee from l. A. Times. Of owup on the question labor market. I know you said its highly there are those hat think well have very high unemployment even until the end of next year, high as 9 . This point, can you talk a you e bit about more what see the path of employment in the coming months into next year . So unemployment is going to go up to a high number Second Quarter. Ncertain what the number will be. When and thats because so much Economic Activity has been as we take eally, measures. Tancing and so sometime fairly soon here gradually and at different paces, different parts of the country, well see the social distancing measures back. People will begin to spend more money. Its really Consumer Spending fallen precipitously. And once that starts to p had a, be happen, people will be hired back. Will get to the numbers, 3. 5 . W it will take some time for that us to resemble maximum employment. E want to get back on that road. We want to get that recovery going and get people back to as we can. T not faster than we can, but as fast as we can. Thing is to get into that stage where the economy is healing, where we have the where we der control, dont, you know, take too much isk of second and third waves and that sort of thing and get people back to work. It know, again, the path of but we willcertain, be this with our be there with our tools supporting our supporting that supporting our economy and supporting that recovery. Scott. Scott thanks, mr. Chairman. Crisis, e financial banks were instructed to up their capital so they can shock. An economic what kind of steps do you think economy o take for the at large to make it more kind of shock . Is chair powell youre a little volume. Scott yes. What kind of steps could we take o help the economy as a whole be more resilient to this kind shock . Chair powell this is an xtraordinary, extraordinary shock. Unlike anything certainly thats lifetime. N my and a couple things come to mind. A hink the time for come for careful assessment of the answers to those questions. Them. Arly to be asking were still putting out the fire. Were still trying to win. At that for a e while. But i point to a couple directions. Hard to we worked strengthen the banks. Much higher levels of capital, greater sense of what the risks are, theyre them. G and how to manage so the breakdowns that weve seen in market function have in the capital markets. In with ldnt rush regulation into the capital markets. We did plenty of things. A lot of reform in the capital markets. Money market reform. Reform. Central clearing. All these important things. With ere will no doubt be this the size and force of reveal ck will no doubt weaknesses in the Financial Market architecture and we have to go to work on those. Think it tells you the importance of getting your order. House in the u. S. Really hadnt really gotten back to where we policy. O get on fiscal you know, we havent already have a high level of debt to g. D. P. And rising quickly when this shock arrived. The fiscal capacity to deal with it, i believe. Ut we will need to ideally, youd go into an unexpected hock like this with a much posture. Fiscal mike mckey. The mr. Chairman, given demand drop, demand shock and he drop in oil prices, do you anticipate we might see any kind short ation even for a period that would require a fed response . Negative print on c. P. I. Or c. P. E. , how should about that . Second, there is a disconnect, t appears, between the markets and the Economic Outlook right now. I know you said this isnt the about moral hazar

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