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Powell: Federal Reserve not out of ammunition 'by a long shot'

Brian Cheung
Reporter

Federal Reserve Chairman Jerome Powell said the central bank can still do more to soften the economic blow of the coronavirus pandemic, telling CBS’s 60 Minutes that a recovery is possible in the second half of the year.

“There's a lot more we can do,” Powell said. “We've done what we can as we go. But I will say that we're not out of ammunition by a long shot.”

Powell said the Fed could deploy new lending programs beyond the arsenal of facilities that it has opened up since the COVID-19 crisis began. Powell said the Fed could also adjust the forward guidance it provides to markets and the pace of its asset purchases.

The interview, televised on Sunday but taped on May 13, also offered cautious optimism over the speed of an economic recovery.

Powell said data covering the second quarter (April through June) will be “very, very bad” and warned that the economic difficulty could even last “though the end of next year.” The Fed chair said projections for unemployment to reach 20% to 25% “sound about right.” 

But Powell said he still expects the economy to “recover steadily through the second half of this year.”

Federal Reserve Chair Jerome Powell speaks during a news conference, Tuesday, March 3, 2020, to discuss an announcement from the Federal Open Market Committee, in Washington. (AP Photo/Jacquelyn Martin)

“In the long run, and even in the medium run, you wouldn't want to bet against the American economy,” Powell said. “This economy will recover.”

Powell said the pace of the recovery will ultimately depend on getting the virus under control and the ability of people to follow social distancing to avoid a resurgence in coronavirus cases.

Fed Chairs rarely speak on national television, but Powell’s 60 Minutes appearance marks the second appearance since the COVID-19 crisis began. He spoke to NBC’s Today Show on March 26.

Powell previously spoke to 60 Minutes in March 2019.

Powell’s remarks on 60 Minutes come two days before his scheduled testimony to the Senate Banking Committee. The Fed’s next scheduled policy-setting meeting on June 9 and 10.

Brian Cheung is a reporter covering the Fed, economics, and banking for Yahoo Finance. You can follow him on Twitter @bcheungz.

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