NEW YORK (MaceNews) – The full scale of economic fallout from the COVID-19 pandemic remains unknown, but the Federal Reserve has acted decisively to support recovery, New York Fed President John Williams said Thursday.
“Although stresses in financial markets will not entirely abate until the pandemic is behind us, we have seen material improvements in measures of liquidity and market functioning,” Williams said during a webcast event.
The Fed has undertaken its largest-ever interventions in financial markets, and has acted through its array of special facilities, he said. Its goal is to restore access to liquidity, in particular to ensure credit is available to otherwise healthy businesses.
Asked to quantify the scale of economic declines in the current quarter, Williams declined, and said the Fed has acted decisively, and at scale. “We have done everything in our power,” he said, adding that the central bank will continue to use all its tools within the law to support recovery, subject to limits imposed by the Treasury credit backstop.
Economic recovery may be gradual, and may be spotty, reflecting the phased lifting of social distancing and other measures, he said. It is also unclear how people will behave as the restrictions are lifted. Some sectors, like construction, where projects were suspended, are likely to bounce back more rapidly than others, Williams said.
The key driver to solvency issues will be how long it takes for the economy to restart, and whether there is a recurrence of the virus, he said.