Federal Reserve Bank of Boston President Eric Rosengren said the roll-out of a new lending program for small-and-medium-sized U.S. companies may still be “another couple” of weeks away.
“It’s a complicated facility to appropriately scope,” he said in an interview Wednesday on Bloomberg Television. “We’re doing these facilities as fast as we can, and like every organization we’re dealing with a lot of people that are working remotely from home.”
Rosengren added the facility was “still in the design phase” and that it was important to ensure that banks understand how it will work.
The U.S. central bank has in recent weeks unleashed a torrent of actions aimed at keeping credit markets functioning globally and blunting the impact on the American economy of the unprecedented shutdowns forced by the coronavirus pandemic.
The Fed has lowered interest rates to near zero, purchased more than $500 billion in government-backed debt and announced six emergency lending facilities. Announcements on two additional programs, the Main Street facility and a program for buying debt issued by cities and states, are expected soon.
Rosengren said the Fed’s actions so far have helped somewhat stabilize markets for U.S. Treasuries, mortgages and commercial paper, and taken pressure off money market mutual funds. Those areas came under tremendous strain as companies, households and investors rushed into cash as the scope of the contagion and its impact on the economy became clear.
Rosengren’s Boston Fed is administering a facility that purchases assets from some money market funds to help them meet withdrawal requests from customers without having to sell assets into dysfunctional markets.
“There’s not much we can do about the health crisis,” he said. “But there are things we can do to limit the amount of spillover to financial markets.”
Rosengren, who doesn’t vote this year on the policy-making Federal Open Market Committee, hesitated to give any precise economic forecasts because the models he and his staff use rely on historical data that doesn’t incorporate any similar experience.
Still, he said unemployment will likely hit at least 10% by the end of the second quarter.
“The bigger issue is whether we’re able to contain problems in the public health sphere and also in the financial spillover sphere to make sure the unemployment rate doesn’t stay as elevated over time,” he said.
In separate remarks he’s scheduled to deliver Wednesday, Rosengren said the Fed and Congress have more to do to contain the economic fallout.
“We must continue to adapt as the crisis proceeds, with constant attention to the plight of workers who have been or will be laid off,” he said in the text of his prepared remarks.
