Eric Rosengren, president of the US Federal Reserve from Boston, said on Wednesday that the central bank had moved quickly to address the deterioration in several parts of the financial market that had been crippled by the coronavirus crisis.
“At the central bank, we are focused on addressing and mitigating the economic impact of the pandemic,” said Rosengren in comments prepared for an online forum with the Boston Chamber of Commerce. “The Federal Reserve responded quickly to address the effects of the economic disruption.”
However, he said that more needs to be done, especially in Congress, which recently passed the $ 2 trillion rescue CARES law.
“I think we will probably have to do more than the CARES law provides, but I think it was a very good start to try to cut some of the costs,” ; said Rosengren in later comments.
He expressed particular concern about some of the most vulnerable members of society at the lower end of the economic spectrum. Legislative action should focus on “simplicity and speed” to help those who need it, he said.
He also said that he believes future federal moves will have to direct aid directly to states, while small businesses will also need more help.
In addition to government aid, he also encouraged a general community focus on nonprofit organizations such as pantries and homeless shelters.
“I am confident that future legislation, when considering other remedies, will really consider how we can mitigate the impact of the pandemic on our vulnerable populations,” said Rosengren.
Despite the help of Congress and the Fed, Rosengren said the coronavirus would continue to hit the economy, especially employment.
The Fed has taken a number of unprecedented measures, even given the interventions it took during the financial crisis. These measures include bringing short-term benchmark interest rates close to zero, adding a new round of unlimited asset purchases, creating several programs that aim to keep financial markets moving and bring money to businesses and needy individuals.
Such a small business credit initiative is under the direct patronage of the Boston Fed.
“Selling high-quality debt to even the strongest companies and governments has been a challenge for the funds,” said Rosengren. “The Boston Fed has opened a facility that lends money to banks so they can buy these highly valued assets from money market funds.”
Economic activity increased when public health officials introduced social distancing practices to slow the spread of the corona virus.
While practice provides an important public service, it also distorts “the credit and liquidity flows that support our economy and threatens the greater pain of a full-blown financial crisis,” said Rosengren.
Like other Fed officials, he predicted that the economy will suffer if efforts to curb the virus continue.
“We need to continue to adapt as the crisis progresses, keeping a constant eye on the plight of the redundant or fired workers. Unfortunately, we expect the unemployment rate to increase dramatically,” he said.