Economics
Powell Warns of Broad Virus Danger, Bats Down Negative Rates
- Fed chair says outlook uncertain, downside risks significant
- Says more fiscal aid may be worth cost to limit long-term harm
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The U.S. economy faces unprecedented risks from the coronavirus if fiscal and monetary policy makers don’t rise to the challenge, Federal Reserve Chair Jerome Powell said while pushing back against the notion of deploying negative interest rates.
“The recovery may take some time to gather momentum, and the passage of time can turn liquidity problems into solvency problems,” Powell said Wednesday in remarks to a virtual event hosted by the Peterson Institute for International Economics. “Additional fiscal support could be costly, but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery.”