Clarida says Fed can and will do more to support U.S. economy

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Federal Reserve Vice Chairman Richard Clarida said the U.S. central bank is prepared to take additional steps to support the economy through the damage caused by the coronavirus.

“We’ve taken very aggressive, proactive action,” Clarida told the Fox Business Network in an interview on Friday. “There’s more that we can do and we will.”

Clarida said the amount of credit the Fed can provide through the nine emergency programs it has unveiled to shore up the economy is limited only by the taxpayer backstops extended to each facility by the U.S. Treasury Department to protect against losses.

Federal Reserve Vice Chairman Richard Clarida
Federal Reserve Vice Chairman Richard Clarida

“For the foreseeable future I don’t see a limit as being a practical consideration,” he said.

Fed officials last week held interest rates near zero and signaled they would keep them there through 2022 to help households and businesses make it through the period of shutdowns triggered by the virus. They’ve also said that more stimulus may be needed from both monetary and fiscal authorities.

Chair Jerome Powell urged Congress on Wednesday not to pull back too quickly on federal relief for households and small businesses.

Lawmakers are debating whether to renew the fiscal-aid measures they’ve approved for the millions of Americans who lost their jobs in recent months as businesses closed to stem the spread of the virus. The expanded unemployment insurance payments of $600 a week that formed part of the relief package are set to expire on July 31.

So far, Congress has authorized about $3 trillion of aid. The White House and Democrat lawmakers are pushing for another package, while many Republicans maintain Congress should wait and assess the economic impact of the measures that have already been put in place.

Clarida, as he and other Fed officials have done repeatedly in recent week, ruled out the idea the central bank may push its benchmark interest rate into negative territory.

Bloomberg News