Officials agreed that the virus would weigh heavily in the near-term and “posed considerable downside risks to the economic outlook,” minutes published on Wednesday (May 20) of the April 28-29 Federal Open Market Committee meeting showed.
“Members agreed that the Federal Reserve was committed to using its full range of tools to support the US economy in this challenging time.”
Fed officials left interest rates near zero when they gathered in late April. In their post-meeting statement, they said the ongoing public health crisis posed “considerable risks to the economic outlook over the medium term,” playing down the notion the US could expect a rapid recovery.
Fed chairman Jerome Powell also followed the meeting with a somber press conference. He warned the coronavirus pandemic could leave permanent scars on the US economy unless policy makers of all stripes did more to limit the damage.
The minutes reinforced that gloomy assessment.
More than 36 million Americans have lost their jobs as the contagion forced thousands of businesses to close their doors across the country. Economic activity plunged by 4.8 per cent on an annualised basis in the first quarter. Economists have estimated it will collapse by a staggering 34 per cent in the second quarter.
The Fed has scrambled to prepare a host of emergency lending programmes since mid-March, first to smother a selling panic that gripped short-term money markets, then to mobilise credit for distressed US households and businesses – as well as state and local governments.
It has launched five programmes so far. Four more, including a US$600 billion (S$840 billion) Main Street Lending Program, are expected to begin operating later this month.
The April 28-29 FOMC meeting was held via video conference. It was the first regularly scheduled session for the panel since January.
The meeting planned for March 17-18 was cancelled after the committee held two emergency sessions on March 3 and 15 at which the FOMC lowered the target range for the Fed’s benchmark interest rate by a total of 1.5 percentage points. The range remains at zero to 0.25 per cent.