Powell "Discussing Asset Purchase Changes... Stimulus Needed"

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] Jerome Powell, Chairman of the Federal Reserve (Fed), mentioned that although options to change asset purchases were discussed, no changes have been made yet.

Chairman Powell stated this on the 5th (local time) during a press conference held after the Federal Open Market Committee (FOMC) decided to maintain the 'zero interest rate.'

Powell also emphasized that the Fed has not exhausted all its ammunition to support the economy. In response to the question, "Have all tools to stimulate the economy been fully used?" he said, "I do not think so. We are committed to using powerful tools necessary to support the economy." He added, "I believe there is more we can do."

When asked whether there would be changes in Fed policy if additional fiscal stimulus is not provided, he replied, "We will consider all external factors."

The market interpreted this as a possibility of changes at the December FOMC meeting. John Hill, BMO bond strategist, commented, "This suggests that the stance on asset purchases may change at next month's FOMC meeting."

On the same day, Chairman Powell again emphasized the need for more monetary and fiscal policies. He said, "Full economic recovery will be difficult until we are confident it is safe to re-engage in broad activities," and stressed, "Wearing masks will help the economy."

Powell also stated, "I think additional stimulus through monetary and fiscal policy will be necessary." He added, "It is up to Congress to decide the timing and scale of additional support for the economy," and noted, "The support under the CARES Act passed last March was essential and exceeded expectations in backing the recovery."

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