What did Jerome Powell say the US Senate Banking Committee?


On Tuesday afternoon, Federal Reserve Chairman Jerome Powell spoke before the US Senate Banking Committee. The head of the Federal Reserve, as several times before, noted the importance and significance of the fight against the "coronavirus" and said that without a victory over the virus, there will not be a full recovery of the economy. According to Powell, there are only small signs of recovery at the moment, and economic activity remains far below the level seen before the epidemic and crisis. Powell noted a high level of uncertainty about the timing and pace of economic recovery, as there remains a high degree of uncertainty around the "coronavirus". Powell also said that the consequences of the epidemic in the form of increased unemployment, waves of small business failures will cause long-term damage to the economy. "Until people are confident that the disease is under control, a full recovery is unlikely," the head of the Federal Reserve said. In principle, this is what we have discussed in recent articles. Even if the quarantine is completed and all quarantine measures are lifted, if people are afraid of getting sick, they will significantly restrict their movements and activities and, as a result, limit their spending. In addition, Powell notes that the fall in the number of jobs will negatively affect low-income Americans, representatives of national minorities, and women, as well as increasing the gap between the poor and the rich. "If it is not stopped and reversed, this downturn may exacerbate the problem of economic inequality among the population, which has made some progress over a long period of economic growth," the Fed Chairman said. Also, Powell once again drew the attention of Congress to the fact that the unemployed and businesses require longer-term support than that implied by the current $ 3 trillion programs. Thus, according to Powell, the economy should continue to be supported by direct monetary injections. The head of the Federal Reserve also focused on the importance of supporting small businesses, which is the "heart of the American economy".

Today, on Wednesday, Jerome Powell will address the House of Representatives of the US Congress. Most likely, the content of his speech will remain unchanged.

Well, based on the results of Powell's speech, we can say the following. The head of the Federal Reserve clearly understands what problems the US economy is facing and what consequences it will have. Unlike Donald Trump, who has already promised a rapid and strong economic recovery in the third and fourth quarters of 2020, and at the same time a "stunning 2021", as if forgetting that in 2021 he can no longer be president of the country, Powell is aware that there will be no rapid recovery. Moreover, the Chairman of the American Central Bank is absolutely right, stating the importance of fighting the "coronavirus". Based on this, we cannot draw any optimistic conclusions. And this applies, oddly enough, to all countries, including the European Union. Therefore, we do not believe that the US dollar will become cheaper because of Powell's words since the economic situation in Europe is no better. Moreover, the US currency, on the contrary, rose in price during the speech of the head of the Federal Reserve.

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