Press conference exchange between JAMES POLITI and Fed Chair Jerome Powell:

user: Thank you, Michelle. And thank you, Chair Powell. You and the Fed have consistently said that the Fed is ready to provide the economy with more monetary support if needed and really stressed to policymakers generally that the dangers of not doing enough outweigh the risks of doing too much in a situation where there’s so much suffering in the economy. The guidance today cements asset purchases for a longer period of time but is not a big new easing step. Why was now, with the short-term outlook deteriorating due to the new coronavirus surges, not the moment for a big new easing step? And is it because of the medium-term outlook improving? Or is it because the Fed just doesn’t have the capacity to build that bridge over the next four to five months for the—for the people who are struggling?

assistant: Right. So I, I could go back, James, to what I said earlier, which is, this is—this is a very, very large asset purchase program. It’s providing a tremendous amount of, of support for the economy. If you look at the interest-sensitive parts of the economy, they’re performing very well. The parts that are not performing well are not struggling from high interest rates. They’re struggling from exposure to, to COVID, in a sense. These are—these are the businesses that, that are really hit hard by people’s reluctance to gather closely. So, so we, we do have the ability to—you know, to buy more bonds or to buy longer-term bonds. And, and we may—we may use it. I’m not saying we won’t—we won’t use that. It may well come to, to using that. But also, I would remind—I would also note, though, monetary policy works with “long and variable lags,” is the famous statement. So we think that the big effects from monetary policy are, you know, months and months into the future. So this looks like a—you know, it looks like a time when what is really needed is fiscal policy. And, and that’s why it is, is a very positive thing that, that we’re getting that. So we, we remain open to doing—you know, to, to either increasing the size of our asset purchases, if that turns out to be appropriate, or to just moving the maturities, moving to buying longer maturities, because that had—that also increases accommodation by taking more duration risk out of the market. But we think our current stance is appropriate. And we think that our— you know, that our, our guidance on asset purchases today will also provide support to the economy over time. Again, what we’ve—what we’ve done is, we’ve laid out a path whereby we’re going to keep monetary policy highly accommodative for a long time, really until—really until we reach very close to our goals, which is not, you know, not really the way it’s been done in the past. So that’s, that’s providing significant support for the economy now. We don’t think the economy suffers from a lack of, of highly accommodative financial conditions. We think it’s suffering from the pandemic and people wanting to not engage in certain kinds of economic activity. And we expect that, that with the virus, will improve—that condition will improve. Nonetheless, again, we will—are prepared to use our tools, and we will use them at such time and in such amounts as we—as we think would, would help.