Photo: Jacquelyn Martin Associated Press
The director of the u.s. central bank, Jerome Powell
The boss of the us central bank has called on Wednesday, the elected officials to do everything, even if it is costly, to prevent a long recession in which the deleterious effects imposed once again the most vulnerable populations.
“Support additional budget could be costly, but it is worth the effort if it helps avoid economic damages in the long term and allows us to have a more robust recovery,” said Jerome Powell in a virtual exchange with the Peterson Institute, a centre of reflection of Washington. To date, Congress has provided approximately 2900 billion dollars of financial support to households, businesses, health care providers, as well as to state and local governments, “or about 14% of the GDP,” he recalled.
Do not look at the expenditure
To the extent that the ” recovery could take some time before accelerating “, it is estimated that the additional aid will probably be needed to combat the impact of the sars coronavirus. For the time being, “the extent and speed of this recession are unprecedented” in modern history, “much worse than any since the Second world War,” he commented.
Jerome Powell was also an investigation of the Fed which will be released on Thursday showing that households on lower incomes who suffer the most : among the people who had a job in February, ” nearly 40 % of those households earning less than $ 40,000 per year have lost their jobs in march “.
It is the decline in the u.s. GDP in the first quarter, the largest decline since the fourth quarter of 2008.
For its part, the u.s. central bank has taken a series of measures to support the economy, households and companies : the lower rate to almost zero, flexibility in emergency regulations to allow banks to lend, injection of liquidity into the financial system. When asked about the possibility of rate negative, Jerome Powell has dismissed this idea, noting that studies on the effectiveness of such a measure were ” shared “. It has, however, affirmed that the Fed would continue ” to use [its] tools maximum until the crisis has passed and that the economic recovery is well underway “.
The GDP of the Usa fell by 4.8% in the first quarter, the largest decline since the fourth quarter of 2008, a time when the United States sank into the Great Recession. The fall is expected to be unprecedented in the second quarter, 30 % and 40 %, according to economists.
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