CHECK. SAVANNAH, HODA, BACK TO YOU.
>> TOM COSTELLO, LEADING US OFF,
THANK YOU.
THANK YOU. CONGRESS IS NOT ALONE IN
STEPPING UP TO RESCUE THIS
ECONOMY.
ECONOMY. THE FEDERAL RESERVE, THE
NATION’S CENTRAL BANK, IS TAKING
EMERGENCY MEASURES TO HELP
BUSINESSES AND AMERICANS ALIKE,
CUTTING INTEREST RATES, BUYING
UP HUNDREDS OF BILLIONS OF
DOLLARS OF DEBT AND OFFERING
TRILLIONS IN LOANS TO BANKS.
JOINING US NOW IN A RARE AND
EXCLUSIVE LIVE INTERVIEW IS
JEROME POWELL, CHAIRMAN OF THE
FEDERAL RESERVE, MR. CHAIRMAN,
GOOD MORNING TO YOU, IT’S GOOD
TO HAVE YOU WITH US.
>> GOOD MORNING, THANK YOU,
SAVANNAH.
SAVANNAH. >> THE FEDERAL RESERVE DOESN’T
EXACTLY PRINT MONEY.
BUT AS ONE WRITER PUT IT YOU DO
HAVE THE ABILITY TO CONJURE
MONEY OUT OF THIN AIR.
MY QUESTION TO YOU IS SIMPLE.
IS THERE ANY LIMIT TO THE AMOUNT
OF MONEY THE FED IS WILLING TO
PUT INTO THIS ECONOMY TO KEEP IT
AFLOAT?
AFLOAT? IS IT A BLANK CHECK?
>> SAVANNAH, WE -- IN CERTAIN
CIRCUMSTANCES LIKE THE PRESENT
WE DO HAVE THE ABILITY TO
ESSENTIALLY USE OUR EMERGENCY
LENDING AUTHORITIES.
LENDING AUTHORITIES. AND THE ONLY LIMIT ON THAT WILL
BE HOW MUCH BACKSTOP WE GET FROM
THE TREASURY DEPARTMENT.
WE’RE REQUIRED TO GET FULL
SECURITY FOR OUR LOANS SO THAT
WE DON’T LOSE MONEY.
SO THE TREASURY PUTS UP MONEY AS
WE ESTIMATE WHAT THE LOSSES
MIGHT BE.
MIGHT BE. BUT ESSENTIALLY THE ANSWER TO
YOUR QUESTION, THOUGH, IS NO.
WE CAN CONTINUE TO MAKE LOANS
AND REALLY THE POINT OF ALL THAT
IS TO SUPPORT THE FLOW OF CREDIT
IN THE ECONOMY TO HOUSEHOLDS AND
BUSINESSES.
BUSINESSES. >> SO YOU’RE SAYING NO, IT’S NOT
A BLANK CHECK, BUT YES, YOU’RE
PREPARED TO SPEND AN
UNPRECEDENTED AMOUNT?
UNPRECEDENTED AMOUNT? >> WE CERTAINLY ARE.
IT’S NOT A BLANK CHECK IN THE
SENSE THAT WE ARE LIMITED BY THE
ABILITY TO TAKE LOSSES.
BUT I WOULD SAY THAT THE
NUMBER -- EFFECTIVELY $1 OF LOSS
ABSORPTION OF BACKSTOP FROM
TREASURY IS ENOUGH TO SUPPORT
$10 WORTH OF LOANS.
SO REALLY THE ANSWER IS WE
WILL -- WHAT’S HAPPENED IS ALL
OVER THE WORLD INVESTORS HAVE
PULLED BACK TO VERY LESS RISKY
THINGS, THAT’S UNDERSTANDABLE.
BUT WHAT THAT’S MEANT IS THAT
MANY PLACES IN THE CAPITAL
MARKETS WHICH SUPPORT BORROWING
BY HOUSEHOLDS AND BUSINESSES,
MORTGAGES AND CAR LOANS AND
THINGS LIKE THAT HAVE STOPPED
WORKING.
WORKING. WE CAN STEP IN AND REPLACE THAT
LENDING UNDER OUR EMERGENCY
LENDING POWERS.
LENDING POWERS. WE WILL DO THAT.
WHEREVER THERE IS IN THE CAPITAL
MARKETS WHERE CREDIT IS NOT
FLOWING WE HAVE THE ABILITY IN
THIS UNIQUE CIRCUMSTANCE TO
TEMPORARILY STEP IN AND PROVIDE
THOSE LOANS.
THOSE LOANS. WE WILL KEEP DOING THAT
AGGRESSIVELY AND FORTHRIGHTLY AS
WE HAVE BEEN.
>> THE PRESIDENT HAS SAID HE
WOULD LIKE TO SEE THE COUNTRY
RARING TO GO BY EASTER.
HE WANTS THE COUNTRY BACK OPEN.
PUBLIC HEALTH EXPERTS HAVE
RESISTED THAT TIMELINE.
CAN THE ECONOMY HANDLE A MONTH’S
LONG SHUTDOWN IF THAT IS WHAT
THE PUBLIC HEALTH EMERGENCY
REQUIRES AND DEMANDS?
>> WELL, THIS IS A UNIQUE
SITUATION.
SITUATION. SO I THINK THIS IS -- PEOPLE
NEED TO UNDERSTAND, THIS IS NOT
A TYPICAL DOWNTURN.
WHAT’S HAPPENING HERE IS PEOPLE
ARE BEING ASKED TO CLOSE THEIR
BUSINESSES, TO STAY HOME FROM
WORK, AND TO NOT ENGAGE IN
CERTAIN KINDS OF ECONOMIC
ACTIVITY.
ACTIVITY. AND SO THEY’RE PULLING BACK.
AND AT A CERTAIN POINT WE WILL
GET THE SPREAD OF THE VIRUS
UNDER CONTROL.
UNDER CONTROL. AND AT THAT TIME CONFIDENCE WILL
RETURN, BUSINESSES WILL OPEN
AGAIN, PEOPLE WILL COME BACK TO
WORK.
WORK. SO YOU MAY WELL SEE, YOU KNOW,
SIGNIFICANT RISES IN
UNEMPLOYMENT, SIGNIFICANT
UNEMPLOYMENT, SIGNIFICANT DECLINES IN ECONOMIC ACTIVITY.
BUT THERE CAN ALSO BE A GOOD
REBOUND ON THE OTHER SIDE OF
THAT AND THAT’S ACTUALLY ONE OF
THE MAIN THINGS WE’RE TRYING TO
DO BY ASSURING THE FLOW OF
CREDIT IN THE ECONOMY AND
KEEPING RATES LOW IS TO ASSURE
THAT THAT REBOUND, WHEN IT DOES
COME, IS AS VIGOROUS AS
POSSIBLE.
POSSIBLE. >> I GUESS THE ISSUE, THOUGH,
THAT’S BEEN SORT OF RAISED IN
THESE RECENT DAYS IS, IS THE
CURE WORSE THAN THE DISEASE?
IS SHUTTING DOWN THE ECONOMY FOR
THE SAKE OF PUBLIC HEALTH, DOING
LASTING DAMAGE TO THE ECONOMY
THAT MAY NOT BE RECOVERABLE?
SO I GUESS YOU’RE NOT A DOCTOR,
YOU’RE AN ECONOMIST, BUT WHERE
DO YOU COME DOWN ON THAT DEBATE,
IS IT BETTER TO SOLVE THE PUBLIC
HEALTH CRISIS AND THEN LET THE
ECONOMY BOUNCE BACK OR DO YOU
THINK WE SHOULD RUSH INTO
OPENING THE ECONOMY BACK UP
BECAUSE, FRANKLY, THE DAMAGE
BEING DONE IS WORSE?
>> SO THAT, OF COURSE, IS NOT --
WE’RE NOT AN EXPERT, WE’RE NOT
EXPERTS IN PANDEMICS OVER HERE,
WE DON’T GET TO MAKE THAT
DECISION.
DECISION. I WOULD SAY, THOUGH, YOU KNOW
THAT WE WOULD TEND TO LISTEN TO
THE EXPERTS.
THE EXPERTS. DR. FAUCI SAID SOMETHING LIKE
THE VIRUS IS GOING TO SET THE
TIMETABLE AND THAT SOUNDS RIGHT
TO ME.
TO ME. I THINK THE SOONER WE GET THE
SPREAD OF THE VIRUS UNDER
CONTROL PEOPLE WILL REGAIN
CONFIDENCE WHEN THEY BECOME
CONFIDENT THAT IS THE CASE THEY
WILL VERY WILLINGLY OPEN THEIR
BUSINESSES UP, GO BACK TO WORK,
THE CONSUMER WILL BE SPENDING.
SO I THINK THE FIRST ORDER OF
BUSINESS WILL BE TO GET THE
SPREAD OF THE VIRUS UNDER
CONTROL AND THEN RESUME ECONOMIC
ACTIVITY.
ACTIVITY. >> AS YOU WELL KNOW A RECESSION
IS A TECHNICAL TERM.
IT MEANS TWO STRAIGHT QUARTERS
OF NEGATIVE GROWTH.
WE’VE ALREADY HAD ONE QUARTER.
PUT IT BLUNTLY, DO YOU THINK WE
ARE ALREADY IN RECESSION?
DO YOU THINK IT IS INEVITABLE
THAT WE WILL BE IN RECESSION?
>> WE MAY WELL BE IN A
RECESSION.
RECESSION. AGAIN, I WOULD POINT TO THE
DIFFERENCE BETWEEN THIS AND A
NORMAL RECESSION.
NORMAL RECESSION. THIS ISN’T -- THERE’S NOTHING
FUNDAMENTALLY WRONG WITH OUR
ECONOMY.
ECONOMY. QUITE THE CONTRARY.
THE ECONOMY PERFORMED VERY WELL
RIGHT THROUGH FEBRUARY, WE’VE
GOT 50 YEAR LOW IN UNEMPLOYMENT
FOR THE LAST COUPLE OF YEARS SO
WE START IN A VERY STRONG
POSITION.
POSITION. THIS ISN’T SOMETHING THAT’S
WRONG WITH THE ECONOMY, THIS IS
A SITUATION WHERE PEOPLE ARE
BEING ASKED TO STEP BACK FROM
ECONOMIC ACTIVITY, CLOSE THEIR
BUSINESSES, STAY HOME FROM WORK
SO IN PRINCIPLE, IF WE GET THE
VIRUS SPREAD UNDER CONTROL
FAIRLY QUICKLY THEN ECONOMIC
ACTIVITY CAN RESUME.
AND WE WANT TO MAKE THAT REBOUND
AS VIGOROUS AS POSSIBLE.
>> YEAH, A LOT OF PEOPLE SAY
THAT AFTER A RECESSION LIKE THIS
YOU COULD SEE A BIG BOUNCEBACK.
WE DIDN’T SEE THAT IN 2008.
YOU KNOW, IT WASN’T LIKE THE
AVERAGE RECESSION WHERE YOU SEE
A DROP AND THEN YOU SEE A BIG
BOUNCEBACK.
BOUNCEBACK. IT WAS A SLOW AND SLUGGISH
UNCERTAIN RECOVERY AFTER 2008
BUT I THINK I HEAR YOU SAYING
THAT ONCE THIS PUBLIC HEALTH
ISSUE IS RESOLVED YOU EXPECT A
ROBUST BOUNCEBACK.
ROBUST BOUNCEBACK. >> WHAT I’M REALLY SAYING IS WE
DON’T KNOW.
DON’T KNOW. AND THE SOONER WE GET THROUGH
THIS PERIOD AND GET THE VIRUS
UNDER CONTROL THE SOONER THE
RECOVERY CAN COME.
THERE’S NO OTHER -- WE DON’T
HAVE COMPARABLE EXPERIENCES TO
GO BACK AND LOOK AT.
WE KNOW THAT ECONOMIC ACTIVITY
WILL DECLINE, PROBABLY
SUBSTANTIALLY IN THE SECOND
QUARTER.
QUARTER. BUT I THINK MANY EXPECT, AND I
WOULD EXPECT THE ECONOMIC
ACTIVITY TO RESUME AND MOVE BACK
UP IN THE SECOND HALF OF THE
YEAR, VERY HARD TO SAY PRECISELY
WHEN THAT WILL BE AND IT WILL
REALLY DEPEND ON THE SPREAD OF
THE VIRUS.
THE VIRUS. THE VIRUS IS GOING TO DICTATE
THE TIMETABLE HERE.
>> WHEN WE SEE SOME OF THE
ACTIONS THAT THE FEDERAL RESERVE
HAS BEEN TAKING, AND THEY’RE
EXTRAORDINARY AND IN SOME CASES
UNPRECEDENTED, I THINK SOME
PEOPLE WILL FEEL REALLY KIND OF
RELIEVED AND HEARTENED.
AND OTHERS MIGHT FEEL A LITTLE
WORRIED.
WORRIED. WHAT ARE THE RISKS ASSOCIATED
WITH TAKING SOME OF THESE BOLD
ACTIONS, PUMPING SO MUCH MONEY
INTO THE ECONOMY?
I MEAN, ONE ISSUE, OF COURSE,
WOULD BE WORRYING ABOUT
INFLATION.
INFLATION. IS THERE A LONG-TERM RISK TO THE
ACTIONS BEING TAKEN NOW?
>> YOU KNOW, WE DON’T REALLY SEE
THAT.
THAT. WHAT WE SEE, THOUGH, IS WHAT WE
SEE IS SMALL, MEDIUM AND LARGE
BUSINESSES ARE NOT ABLE TO
BORROW THROUGH THEIR NORMAL
CHANNELS TO SOME EXTENT.
WE STEP IN AND REPLACE THAT.
THAT’S A VERY HEALTHY THING.
THAT’S A POSITIVE THING.
WE’RE PROVIDING RELIEF, WE’RE
PROVIDING STABILITY.
PROVIDING STABILITY. WE’RE TRYING TO CREATE A BRIDGE
FROM OUR VERY STRONG ECONOMY TO
ANOTHER PLACE OF ECONOMIC
STRENGTH AND THAT’S WHAT OUR
LENDING REALLY DOES.
IT’S VERY BROAD.
IT’S ACROSS SMALL, MEDIUM AND
LARGE BUSINESSES.
LARGE BUSINESSES. WE’LL -- WE ARE ALREADY HELPING
STATE AND LOCAL GOVERNMENTS AND
JUST PLACES WHERE CREDIT IS NOT
BEING OFFERED WHERE IT SHOULD BE
OFFERED, WHERE IT’S REALLY JUST
A QUESTION OFLY LICK-- APPROPRIA
DO IN THIS HIGHLY UNUSUAL
SITUATION WE’RE IN.
>> THE OTHER ISSUE THAT COMES UP
IS WHETHER OR NOT YOU MIGHT NOT
RUN OUT OF AMMO, RUN OUT OF
BULLETS AND TO THAT POINT ARE
YOU SORRY THAT YOU DIDN’T RAISE
INTEREST RATES A LITTLE MORE
WHEN THE ECONOMY WAS STRONG SO
YOU’D HAVE MORE CUSHION NOW?
>> WHEN IT COMES TO THIS LENDING
WE’RE NOT GOING TO RUN OUT OF
AMMUNITION.
AMMUNITION. THAT DOESN’T HAPPEN.
YOU KNOW, WE SET THE INTEREST
RATES IN TIME AT WHAT WE THINK
IS THE RIGHT -- GIVEN THE
ECONOMY, THE RIGHT LEVEL OF
SUPPORT.
SUPPORT. IF WE’D RAISED INTEREST RATES
MORE IT WOULD HAVE BEEN HIGHER
THAN WE THOUGHT AND ECONOMIC
GROWTH WOULD HAVE BEEN A LITTLE
BIT SLOWER SO IT WOULDN’T HAVE
MATTERED IN THE END.
WE REALLY ARE ALWAYS SETTING OUR
INTEREST RATES AT THE LEVEL WE
THINK IS APPROPRIATE AND WE’VE
CUT THEM TO 0 NOW.
WE STILL HAVE POLICY ROOM IN
OTHER DIMENSIONS TO SUPPORT THE
ECONOMY BUT THE MAIN THING WE’RE
DOING NOW IS REALLY WITH OUR
LENDING PROGRAMS.
LENDING PROGRAMS. THAT’S THE PRINCIPLE THING WE’RE
DOING IS SUPPORTING THE ECONOMY
THROUGH THAT CHANNEL.
>> IF I’M SITTING A THE HOME AND
I LOST MY JOB OR I’M A
RESTAURANT OWNER AND I LAID OFF
EVERY SINGLE ONE OF MY WORKERS
OR I OWN A NAIL SALON AND I HAD
TO CLOSE UP SHOP DOES ANYTHING
THE FEDERAL RESERVE IS DOING
RIGHT NOW HELP ME?
>> YES, WELL KEEPING RATES LOW
WILL REDUCE THE INTEREST BURDEN
ON PEOPLE, KEEPING THE FLOW OF
CREDIT WILL HELP PEOPLE.
PRINCIPALLY, THOUGH, I WOULD
LOOK TO THE LEGISLATION THAT
PASSED LAST NIGHT OR THIS
MORNING.
MORNING. REALLY.
REALLY. WHICH IS GOING TO DIRECT AID TO
SMALL, MEDIUM AND LARGE
BUSINESSES, TO LOW AND MODERATE
INCOME COMMUNITIES, TO THE
UNEMPLOYED.
UNEMPLOYED. TO STATE AND LOCAL GOVERNMENTS.
TO THE HEALTH CARE SYSTEM.
THAT’S REALLY WHERE THE
IMMEDIATE RELIEF IS GOING TO
COME FROM.
COME FROM. THE HELP FROM THE FED WILL BE
WHEN THE ECONOMY BEGINS TO
REBOUND THEN WE’LL BE THERE TO
MAKE SURE THAT THAT REBOUND IS
AS STRONG AS POSSIBLE.
>> MR. CHAIRMAN, I HAVE TO ASK
YOU, I’M SURE YOU’RE AWARE THE
PRESIDENT HAS BEEN QUITE
CRITICAL OF THE FED AND OF YOU
PERSONALLY.
PERSONALLY. I’M NOT GOING TO GET INTO ALL OF
IT BUT HE HAS IN TWEETS CALLED
YOU CLUELESS, CALLED THE FED
PATHETIC, SLOW MOVING.
DOES WHAT THE PRESIDENT SAYS
AFFECT YOU AND WHAT YOU DO?
DOES IT MAKE YOUR JOB HARDER OR
DO YOU JUST IGNORE IT?
>> YOU KNOW, MY COLLEAGUES AND I
HERE ARE TOTALLY FOCUSED ON OUR
MISSION OF SERVING THE AMERICAN
PEOPLE.
PEOPLE. WE KNOW THAT WHAT WE DO IS
IMPORTANT FOR ALL AMERICANS.
AND WE TRY TO DO OUR ABSOLUTE
BEST TO SERVE THEM IN A WAY THAT
IS COMPLETELY NON-POLITICAL,
NON-PARTISAN.
NON-PARTISAN. JUST TO SERVE ALL AMERICANS.
THAT’S OUR ONLY FOCUS.
WE DON’T LET ANYTHING ELSE GET
INTO OUR THINKING AND I THINK,
YOU KNOW, THAT’S JUST THE WAY IT
ALWAYS IS AT THE FED.
WE HAVE A VERY STRONG CULTURE.
THAT’S DEEP IN OUR DNA AND
THAT’S JUST THE WAY IT’S ALWAYS
GOING TO BE.
>> AND FINALLY, SIR, IN ABOUT
TEN SECONDS I HAVE LEFT WE WENT
BACK AND LOOKED, THIS SHOW’S
BEEN ON THE AIR 60 PLUS YEARS, I
THINK IT’S BEEN 30 YEARS SINCE
WE HAD A FEDERAL RESERVE
CHAIRMAN ON LIVE, MAYBE LONGER,
MAYBE NEVER.
MAYBE NEVER. IT’S SO RARE TO HAVE AN
INTERVIEW LIKE THIS.
I JUST WAS CURIOUS, WHY YOU
DECIDED TO SPEAK OUT AND WHAT IS
THE MESSAGE YOU WANT TO SEND TO
AMERICANS AT THIS VERY DIFFICULT
TIME?
TIME? >> SO REALLY THE MESSAGE IS
THIS.
THIS. THAT THIS IS A UNIQUE SITUATION.
IT’S NOT LIKE A TYPICAL
DOWNTURN.
DOWNTURN. WE’VE ASKED PEOPLE TO STEP BACK
FROM ECONOMIC ACTIVITY REALLY TO
MAKE AN INVESTMENT IN OUR PUBLIC
HEALTH.
HEALTH. THEY’RE DOING THAT FOR THE
PUBLIC GOOD AND THIS BILL THAT’S
JUST PASSED IS GOING TO TRY TO
PROVIDE RELIEF AND STABILITY TO
THOSE PEOPLE.
THOSE PEOPLE. THE FEDERAL RESERVE IS WORKING
HARD TO SUPPORT YOU NOW AND
WE’LL -- AND OUR POLICIES WILL
BE VERY IMPORTANT WHEN THE
RECOVERY DOES COME TO MAKE THAT
RECOVERY AS STRONG AS POSSIBLE.
>> ALL RIGHT, FEDERAL RESERVE
CHAIRMAN JEROME POWELL.