Comments from the Fed Chair:
- Fed loans are secured and have expectation of prepayment
- There will be entities that need direct fiscal support
- Fed has lending, not spending power
- There are reasons to believe rebound can be robust when it comes
- Market conditions generally improved after Fed actions
There's no hint at more actions here but the Fed has now rolled out around 20 new programs in just over 5 weeks.
From the Q&A:
- Sees very weak second quarter in US
- Expect fairly quick rebound once virus has run its course
- Most people expect that rebound to happen in H2
- Fed will be in no hurry to pullback on programs
- Economy has to be on solid footing before the Fed pulls back
- Monetary policy is in the right place, the focus for the next few months is on lending programs
Question: Should banks be ordered to stop paying dividends?
Powell: In my way of thinking, not something that needs to be done at this point. Far more highly capitalized than they were before financial crisis. Will watch to see how evolves.
