Jerome Powell, chairman of the US Federal Reserve, said that a second wave of coronavirus infections might hinder the recovery from the deep recession caused by the pandemic. He stressed that the central bank’s effort to fight the crisis might not be enough to avoid further deterioration in the case of a potential surge in COVID infections.
The Fed has cut its interest rates to almost zero and launched credit facilities for local governments and companies to address the economic pressure amid the lockdown measures.
So far, over 101,000 US citizens have died from the new
disease. Many officials worry about another wave of infections as the economy
is gradually reopening. Powell said:
“I think a second wave would really undermine public confidence and might make for a significantly longer recovery and weaker recovery.”
When asked about limits to the central bank’s crisis
instruments, Powell said there were few if any. He stressed that dealing with “an
emergency of a nature we haven't really seen before... we crossed a lot of red
lines that had not been crossed before, and I am very comfortable that this is
that situation where you do that.”
The Fed’s lending programs pushed its balance sheet to a record high of over $7 trillion.