Gold prices hit new daily highs, reaching $1,750 an ounce, as Federal Reserve Chair Jerome Powell reiterated that the U.S. central bank is committed to using its full range of tools to support the U.S. economy during the coronavirus pandemic.
“We are committed to using our full range of tools to support the economy in this challenging time even as we recognize that these actions are only a part of a broader public-sector response,” Powell said during his testimony before the Senate Banking Committee.
Powell also reiterated that the Fed and Congress might need to do more before the COVID-19 crisis is over. “The Fed may need to do more and Congress may as well,” he said when answering one of the question.
Powell highlighted that economic data for the current quarter are showing “a sharp drop in output and an equally sharp rise in unemployment” and warned that long periods of unemployment can impact people’s ability to get back to work.
“The coronavirus outbreak is, first and foremost, a public health crisis,” Powell stated. “The scope and speed of this downturn are without modern precedent and are significantly worse than any recession since World War II.”
Powell has summarized the Fed’s actions in response to the coronavirus crisis and stressed that the Fed will continue to do everything in its power to help the economy recover.
“In March, we lowered our policy interest rate to near zero, and we expect to maintain interest rates at this level until we are confident that the economy has weathered recent events and is on track to achieve our maximum-employment and price-stability goals,” he said. “The tools that the Federal Reserve is using under its 13(3) authority are for times of emergency, such as the ones we have been living through. When economic and financial conditions improve, we will put these tools back in the toolbox.”
On top of everything done so far, Powell revealed that the central bank is preparing to launch the Main Street Lending Program by the end of this month.
“The Federal Reserve is also preparing to launch the Main Street Lending Program, which is designed to provide loans to small and medium-sized businesses that were in good financial standing before the pandemic … Public input has been crucial in their development,” he stated.
Powell also noted that Congress’ passage of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was “critical” in enabling the U.S. central bank and the Treasury Department to create all of the lending programs with “the capacity to make more than $2.6 trillion in loans.”
“The virus has created tremendous strains in some essential financial markets and impaired the flow of credit in the economy,” Powell added. “All of us are affected, but the burdens are falling most heavily on those least able to carry them.