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'Extraordinary shock' -Fed Chair Powell assesses economic blow

Video Credit: Reuters - Politics - Duration: 02:21s - Published
'Extraordinary shock' -Fed Chair Powell assesses economic blow

'Extraordinary shock' -Fed Chair Powell assesses economic blow

The Federal Reserve on Wednesday left interest rates near zero and repeated a vow to use its "full range of tools" to shore up the U.S. economy amid an ongoing coronavirus pandemic that will not only slam growth in the near term but pose "considerable risks" in the medium term as well.

This report produced by Jillian Kitchener.

(SOUNDBITE) (English) U.S. FEDERAL RESERVE CHAIR, JEROME POWELL, SAYING: "It’s an extraordinary shock.

Unlike anything, certainly, that's happened in my lifetime." A stark assessment of the U.S. economy, Wednesday, from U.S. Federal Reserve Chair Jerome Powell.

The Fed left interest rates near zero and repeated a vow to do whatever it takes to support the economy - one that’s been in a free-fall since the coronavirus outbreak forced businesses nationwide to shut and for consumers to stay home.

(SOUNDBITE) (English) U.S. FEDERAL RESERVE CHAIR, JEROME POWELL, SAYING: "We expect to maintain interest rates at this level until we're confident that the economy has weathered recent events.

(flash) We will continue to use our tools to assure the recovery when it comes will be as robust as possible." Data out Wednesday showed the U.S. economy shrank in the first quarter for the first time in a decade - ending what was the longest period of growth in U.S. history.

In a matter of weeks - the U.S. economy has gone from historically low unemployment to seeing more than 26 million people file for jobless benefits.

And Chairman Powell says there is not a quick fix: (SOUNDBITE) (English) U.S. FEDERAL RESERVE CHAIR, JEROME POWELL, SAYING: "I think it will take some time for that to happen - for us to get back to anything that resembles maximum employment." Powell said the strength of the economy depends on the trajectory of the virus: (SOUNDBITE) (English) U.S. FEDERAL RESERVE CHAIR, JEROME POWELL, SAYING: "How long will it take to get it under control, will there be additional outbreaks... In the near term we are going to see, you know, significant declines in economic activity, significant declines in employment and increases in unemployment - we're going to see that as a consequence of the virus and the measures we are taking to protect ourselves from it... probably the economic activity will pick up as consumer spending picks up... But the chances are it won't go right back to where we were because people will, until they're confident, that the virus is well and truly under control, then they will be somewhat reluctant to undertake certain kinds of activity.

So it may take some time." Powell’s comments came at the end of a two-day policy meeting that was held via videoconference.

The Fed said it will continue to buy U.S. Treasuries and agency residential and commercial mortgage-backed securities in the amounts needed to support smooth markets.

Powell added that the novel coronavirus could threaten economic growth for another year... but tried to assure Americans, saying we are doing all we can.




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