FOMC Press Conference Introductory Statement, July 29, 2020

TL;DR

Chair Powell reaffirms the Federal Reserve's commitment to using all available tools to provide relief and stability during the COVID-19 pandemic, and highlights the need for continued support from both monetary and fiscal policy.

Transcript

CHAIR POWELL. Good afternoon. The pandemic continues to cause tremendous human and economic hardship here in the United States and around the world. The most important response to this public health crisis has come from our health-care workers, and we remain grateful to them and to the many other essential workers for putting themselves at risk day... Read More

Key Insights

• 🥡 The path of the economy is highly uncertain and depends on the containment of the virus and policy actions taken at all levels of government to support the recovery.
• 🖐️ Fiscal policy plays a critical role in providing direct support to businesses and households, and more fiscal support may be needed in the future.
• ✊ The Federal Reserve's emergency lending powers have been used extensively during the crisis, but the focus is on lending, not spending powers. Direct fiscal support may be needed in certain cases.
• 😘 The pandemic has exacerbated existing inequalities in the economy, with lower-wage workers, women, and minority communities facing the most severe job losses and economic challenges.

Questions & Answers

Q: What actions has the Federal Reserve taken to provide relief and stability during the pandemic?

The Federal Reserve has cut interest rates to near-zero, implemented asset purchase programs, and introduced lending facilities to support households, businesses, and local governments.

Q: How has the pandemic affected inflation?

The pandemic has led to supply constraints and weaker demand, resulting in higher prices for some goods but overall inflation remains below the Fed's 2% target.

Q: Is the Federal Reserve concerned about the potential for a double-dip recession?

There is uncertainty regarding the economic outlook due to the recent spike in COVID-19 cases, and the Fed is closely monitoring high-frequency data to assess the impact on economic activity and employment.

Q: Will the Federal Reserve consider raising interest rates anytime soon?

The Federal Reserve does not anticipate raising interest rates until the economy has fully recovered, which could take a significant amount of time. Their focus is on providing support and ensuring a robust recovery.

Summary & Key Takeaways

• The COVID-19 pandemic continues to cause significant economic hardship globally, and the Federal Reserve is committed to using its tools to provide relief and stability.

• While economic activity has picked up in recent months, overall activity still remains well below pre-pandemic levels.

• The labor market has shown signs of improvement, with job gains in May and June, but the unemployment rate remains high and the downturn has disproportionately affected lower-wage workers, women, and minority communities.