Federal Reserve press conference, 2020-03-03 — Chair Jerome Powell

Question (Jim Tankersley, New York Times): Hi, Mr. Chairman. Jim Tankersley, New York Times. You said that “the ultimate solutions” will come from others, and I have two questions about that. First, is this a coordinated—part of a coordinated action with other central banks, and should we be expecting to see more as part of that? And, second, what would you like to see from American fiscal policymakers in response to these new threats?
Answer: Okay. So, first question. We—we’re in active discussions with central banks around the world on an ongoing basis, as you would guess. I’ve been in regular contact with central bank leaders from around the world. That will continue. Central banks are doing what makes sense in their particular institutional contexts, but we’re all talking to each other on an ongoing basis. And our action today represents what we think is the right policy for us in our particular institutional context under our domestic mandate. You saw this morning’s G-7 statement of finance ministers and governors, and I think that statement does reflect coordination at a high level in the form of a commitment to use all available tools, including health-care policy, fiscal policy, and monetary policy as “appropriate.” So, in terms of fiscal policy, again, not our role. We have—we have a full plate with monetary policy. Not our role to give advice to the fiscal policymakers, but you saw the mention in the G-7 statement—as “appropriate” as well.

Question (Heather Scott, Agence France-Presse): The G-7—Heather Scott with AFP. The G-7 statement seemed to indicate that—I’m sorry. I was away from the mic. Sorry, Heather Scott with AFP. The G-7 statement seemed to indicate that—that policymakers would use tools but were not going to do anything imminent. Does this contradict that, or is this in keeping with the action—the statement by the G-7 this morning? And, can I ask, what would cause you to make—take another step? What would you be looking for, in terms of the economic outlook or data?
Answer: So the sense of the G-7, you know, is to—we have seven countries, obviously, and different policies, different situations, different mandates—a lot of overlap. And the sense of that is to get together as a group and say at a high level that “These are the things we’re going to do. We are going to use our tools—all of our tools in a strong way to—to try to support the economy.” So that’s a statement of general support. I think within that you will see actions. You’ve seen our action. And I think it’s up to individual countries—individual fiscal policies and individual central banks—to do what they’re going to do. I would think it will be— it’s possible there will be some more—more formal considered coordination as we move forward. In terms of—in terms of moving forward, I would say that we do like our current policy stance. We think—we think it’s appropriate to—to support achievement of our dual-mandate goals. But as I said in my—in my statement, we’re prepared to use our tools—tools and act appropriately, depending on the flow of events.

Question (Heather Scott, Agence France-Presse): But anything you’ll be particularly watching that would change that?
Answer: I can’t point to any one thing. It’s always a range of things.

Question (Richard Miller, Bloomberg): Hi. Rich Miller with Bloomberg. Thank you very much for having a press conference. Can you take us a little—through the reasoning behind the rate cut a little bit more in depth? You know, was there a discuss—some economists say this is a supply-side shock, you know, rate cuts are not particularly suitable for this. Others say, well, the supply shock may morph into a demand shock. I wonder if you could just give us a little bit more depth on the reasoning behind the rate cut. Thank you.
Answer: Sure, I’d be glad to. So the virus outbreak is something that will require a multifaceted response. And that response will come, in the first instance, from health- care professionals and health policy experts. It will also come from fiscal authorities should they determine that a response is appropriate. And it would be—come from many other public- and private-sector actors: businesses, schools, state and local governments. But there’s also a role for monetary policy. Monetary policy can be an effective tool to support overall economic activity. We do recognize that a rate cut will not reduce the rate of infection. It won’t fix a broken supply chain. We get that. We don’t think we have all the answers. But we do believe that our action will provide a meaningful boost to the economy. More specifically, it will support accommodative financial conditions and avoid a tightening of financial conditions which can weigh on activity, and it will help boost household and business confidence. That’s why you’re seeing central banks around the world responding as they see appropriate in their particular institutional context.

Question (Ylan Mui, CNBC): Thanks. Ylan Mui from CNBC. Can you tell us what you would do if the virus ends up being contained fairly quickly? Would you envision the Fed actually raising rates in short order if the economic damage doesn’t occur the way that you potentially fear? And I have a second question, which is, President Trump was just tweeting about you this morning and talking about the Fed’s need to cut rates. Did you feel any political pressure to make this move?
Answer: So, on your first question, we’re always going to set monetary policy at a given time in a way that we think best serves our dual-mandate goals, and it’s as simple as that. So, you know, we’ll—if we get to a place where we think it’s an appropriate time to change the stance of monetary policy, we won’t hesitate to do that. I would also say that it’s—it’s very important that people understand that we will always make our decisions based on the best thinking we have, based on our—what we learned from our outreach to businesses, nonprofits, educational institutions that we get every cycle through the Reserve Banks, and the best analysis, the best research. We’re always going to make our decisions in the interests of the American people to carry forward and try to achieve the mandates that Congress has given us. And we’re never going to consider any political considerations whatsoever. We will not do that, and it’s very important that the public understand that.

Question (Christopher Rugaber, Associated Press): Chris Rugaber, Associated Press. I know—you mentioned a little bit of outreach. Some of the Fed Bank presidents were talking about last week how much they were going to listen to their contacts. Have you gotten reports sort of from the ground from your business contacts, nonprofits, and so forth that have affected your decisionmaking? What are—what are you hearing from all those folks? Thank you.
Answer: So we’re—we are hearing—I would just say, the effects are at a very early stage. But you are hearing concerns from people—for example, in the travel business or the hotel business and things like that. That’s—that’s what you are hearing. But you don’t see things showing up in actual data. You do see them showing up in, sort of, sentiment forecast indicators and things like that. We expect that will continue. It will probably grow. And that’s one of the reasons why we’ve come to the view that it would be appropriate for us today to move to support the economy. And that’s what we’ve done. Thanks very much.