The Federal Reserve is ready to do more to help a U.S. economy ground to a sudden halt as businesses shutter and people stay home to slow the coronavirus pandemic, San Francisco Fed President Mary Daly said on Tuesday.
“The Federal Reserve is prepared to do whatever it takes within our powers to ensure that we are part of the solution of shoring up people over the virus, shoring up the American economy and putting us in the best position to grow again once the virus recedes,” Daly said in an interview with Yahoo Finance. “If we do the right thing and shelter in place and curb the spread of the virus, the economy will be in the best position to bounce back.”
With the coronavirus infecting tens of thousands of Americans and killing hundreds each day, three-quarters of the U.S. population are under orders to stay home except for essential trips to slow the spread of the virus.
With businesses laying off millions of workers as demand dries up and states ordering non-essential businesses to close, the economy is likely already in recession, Daly said.
The Fed’s job, along with that of the U.S. government that on Friday finalized a $2.2 trillion rescue package, is to provide the support to financial markets, businesses and people who are doing their duty to boost the public health, Daly said. Once the pandemic threat has passed, the Fed’s programs and low interest rates will help drive the economic recovery, she said.
“The virus and its evolution will determine both the magnitude of the downturn and its duration,” Daly said, adding that Fed staff are working to manage programs already underway and stand up new ones, including the to-be-launched Main Street Lending Facility. “The virus will also determine the amount of action we have to take. These are unprecedented times and they call for unprecedented action.”