NEW YORK (MaceNews) – The Federal Reserve remains open to taking more steps as needed to support the recovery, though negative interest rates are not on the table, New York Fed President John Williams said Thursday.
Williams, answering questions during a webcast with a regional business group, said the economic outlook and the likely course of interest rates remain unclear. “The Fed will use its tools to the utmost” to support the recovery, he said.
“How long interest rates stay low depends on how the economy is doing,” and that hinges on the course of the pandemic, Williams said.
“It will take a while for the economy to recover,” he said.
Williams said the U.S.can afford more fiscal stimulus, and the “only question is how to design it.”
“It remains to be seen whether more fiscal and monetary stimulus will be needed,” he said.
Williams mentioned Fed policy-makers have been meeting at least weekly during the current crisis. Negative interest rates are not on the table, he said. The Fed has focused on ensuring credit is flowing in the economy, and negative rates would be counterproductive, given likely adverse effects on the financial system, he said.
“Negative rates are not the right tool for what we want to accomplish,” Williams said, adding, “We have the tools without going to negative interest rates, we’re going to deploy those tools.”
Earlier, in his prepared remarks, Williams detailed the array of steps the Fed has taken to address the economic crisis. “These are extraordinary times, and the Fed is taking extraordinary actions to ease the economic pain. This is anything but a typical recession, and it has called for a new set of measures to address the economic consequences of the virus.”
“Amid all the change we’re experiencing, you can be assured of one thing: our unwavering commitment to limit the economic damage from the pandemic and foster conditions for a strong and sustained recovery.”
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