disposal to save the economy. he used that comment in the past. stocks rallying today ahead of powell's comments and gilead drug trial for coronavirus treatment has met its main goal. the dow is up 549 points. let's go to edward lawrence with the decision. ed. reporter: cheryl, you had said it, the federal reserve in the first line of the sentence said they will use their full range of tools to support the economy going forward and they will continue to do so. then the federal reserve statement acknowledges human tolle this virus is taking and impact it has. there is weaker demand and significantly lower oil prices have reduced or is holding down inflation even further. the disruptions in the u.s. and around the world it says have given significantly impaired the flow of credit to households and businesses. the federal reserve fomc committee saying the health crisis weighing heavily on economic activity, employment, inflation in the near term. they are seeing big deals, using

significantly in this statement here, in unanimous decision, the fed will maintain the target rate of near zero, between zero and quarter of a point until the fed is certain, it says that the economy has weathered this storm. now the fed also approved establishment after primary credit rate of .25%. the basic credit rate it lends to banks going back and forth no mention other credit facilities being related or created for this. of the almost $5 trillion in stimulus. the federal reserve has yet to go forward. i talked with treasury secretary steve mnuchin and he said -- [inaudible] cheryl: we've just lost edward. i want to give you a recap. we'll look at the dow right now. stocks are actually maintaining their position right now. the dow is up 570. all of the headlines we're seeing cross from the federal reserve right now, again just to recap here, near zero, unanimous decision. it was 10-0 from the fed a unanimous decision and they are

pledging aggressive action as the economic distress worsens. that is coming from the fed, again, 10-0 unanimous decision. also talking about oil prices. i think aggressive action, that is a key line out of this. also the flow of credit impaired. i want to bring in our illustrious panel right now to talk about all of this. first dallas fed advisor danielle dimartino booth. kaltbaum capital management gary kaltbaum is here with me. vision four fund vice president, heather zumarriaga, and fitzgerald group chief investment strategist, keith fitz-gerald. hello to all of you. they didn't do anything we didn't expect, the language in particular their focus on oil prices, i found that very interesting and lack of inflation that we're seeing in the u.s. economy right now? >> well oil, here in texas especially, all the way up, you know, through the middle of the country oil prices are having

devastating effect on the labor market, in addition to the fact so much of the country's services sector has been ravaged. you have kind of a double-barrel, very heavy, bad, macroeconomic data that the fed is nodding to. i think they rightly should be. the importantly the credit has been so impaired whether you're talking about commercial real estate or mortgage lending standards that seized up very quickly or anything from a car loan to credit card lines coming down. these are very real type of factors that the fed should address. maybe i will leave to gary talking about about the big bazooka of facilities that the fed has committed to keep going. cheryl: you need a spreadsheet, danielle, to actually go through to look at those facilities you mentioned. it's insane. >> yeah. cheryl: main street lending facility. you have got the commercial paper facility but, gary k., one thing i'm still blown away with, i can't believe i'm saying this

out loud, they have nearly seven trillion dollar balance sheet at the fed. i never thought i would see that in my lifetime, gary k., there is a lot of concern now about that number? >> oh, i thought it would get there and i think it will go to 16 to $20. let's talk about there is this pandemic. something needed to be done. they have gone to 0% interest rates, so savers are basically screwed. they will stay at zero percent, probably years. they're just going to go keep printing money, every time markets get in trouble or anytime the pipes get clogged going forward. what the ultimate out come of all of this? beats the heck out of me t can't be good when you're conjuring up money out of thin air to do your bidding. i get something has to be done but i think they have gone, i call it run amok and they're making markets used to everything they're doing and good news, markets reacting,

worst areas of the markets turned the corner including autos and cruise lines and airlines and things like that. let's hope it continues because markets going up are a good thing. cheryl: you know what, keith, what concerns me in all of this, is what they're buying. before, if you go back to qe back in 2010 and 2014, they were very specific, went for high-level securities they were buying. now seems like they're going for, well junk bonds to be honest with you and maybe they're giving support to states and counties that were not necessarily fiscally responsible. now they have the federal reserve behind them and that is riskier than what we did in 2010? >> i share that opinion because people forget the success by its very definition, cheryl, includes failure and the financial graveyard is littered with the bones of institutions

that didn't make it. this is a process that has to happen. so this idea of all gain and no pain, fundamentally is to gary's.going to comeback get us some day. i don't know when that is but now the financial out come is -- [inaudible] cheryl: obviously all the economic news we're getting. we'll get initial claims tomorrow. after the this point, 27 million in anything claims filed. i'm curious to hear at 2:30 what he says about the unemployment issue, that is one of the fed's mandates full employment. we're way off that right now. also monetary policy, in general, heather. those are some of the first questions he might be getting, heather. >> absolutely. we're already at 26 million americans unemployed and another 3 plus million americans expected to join that number tomorrow when we get the claims data. look, the fed is having to walk a very you think tight line right now between being way

ahead of the curve and not doing enough because they don't want to be in a situation in 2008 where they were accused not doing enough early on. even people in congress such as senator pat toomey who accused the fed going too fast, too far, in 2008, expanding their balance sheet are not criticizing them now, calling covid-19 somewhat of a freakish black swan event. that is what we have to grapple with. i think stimulus is needed, necessary, right now. how they unwind the balance sheet in the future has to be addressed at some point in time. >> one thing? cheryl: go ahead, gary. >> the fed is telling safe who don't want to risk their money, you get nothing on your money. they tell the risk-takers took ridiculous amount of risk with a lot of leverage, don't worry, we'll backstop you, save you from your losses. >> bingo. >> i'm sorry that is not what markets are supposed to be made

of. i worry about the long termness of this. the fed is supposed to be the place where they lower interest rates, get things moving again. if there is a big issue, do the things here and there. i don't think there is in anything their charter says i will buy up junk bonds, which by the way make people pay up for the bonds because no longer you have real price discovery. you're competing with jay powell on how much he is investing. so it is screwy all the way around for me. i just worry again, what the ultimate out come of this is going to be? cheryl: you know what i'm worried about, danielle, to you, is negative interest rates. that is not part of the discussion yet but that is the fear that we'll have negative interest rates in this country. they have left themselves no room. >> well you know, i will have to push back because in all due deference to minneapolis's neel kashkari, he is the "lone ranger" on federal open market committee advocating for negative interest rates.

jay powell held a pretty firm line saying he will not go there but what he is doing instead is blowing up the balance sheet as he just spoke about. i don't think negative interest rates in the card for the fed because it would really slam banking in america to a screeching halt and that is the last thing we want to have lending stop. i think he recognizes it has not worked and it has not worked in japan. to your point about the idea, of the whole exit, the fed had a failed attempt at quantitative tightening. they couldn't normalize interest rates. the biggest challenge i think to them is they're never going to be able to unwind the biggest experiment in all of monetary policy history and they're going to stick taxpayers with potential losses because liquidity cannot resolve a solvency problem. cheryl: dangerous game that they're playing. i think a lot of us on this panel actually agree with that. danielle, gary, heather, keith. want you to stay right there. i want to bring in lauren

simonetti to look at markets. we didn't see stocks react to that lauren. at the same time i look at treasurys they actually stayed stable. i know you're looking at oil as well? lauren: right, right. let's talk, cheryl about the major rally that sustained itself, even after the fed announcement. stocks came back a little bit. the dow is still up 500 points. the s&p 500, that is back above 2900. big tech leading the way, nasdaq up about 3%. speaking of risk out there, the russell 2000, that is the small cap stocks, up almost 5% today, up the past couple days. what lit a fire under the market happened very early this morning. it was gilead sciences. they make remdesivir. that is a treatment for coronavirus. well the nih director, dr. anthony fauci says that drug has proven to reduce recovery time in patients but he did add data of course needs further analysis. but we're expecting to get more

details from a government study of remdesivir. that could be announced later today. meanwhile another study by gilead saw at least half of patients given five-day dosage got better, discharged from the hospital within two weeks. the hope is that regulators green light this drug and americans can get back to work. it is not a vaccine. it is not a cure, but might be our best hope right now that the coronavirus doesn't have to be a death sentence. you can make people, as the economy starts to reopen, you can make people feel comfortable going out again in public. that hope has overshadowed another round of dismal economic data. we'll get another round of it tomorrow with jobless claims. we're expecting to see in six weeks time 30 million people out of work. cheryl: yes,. >> filing for these benefits. cheryl: i know. >> people unemployed so we're looking into the future and hope that we can restart the economy. cheryl: you look, gdp, coming in at contraction of 4.8% was certainly not a great number.

i mean, i shudder to think about the second quarter and the economic news we're going to get out of q2. that was just for q1, lauren. lauren simonetti live for us. just when you think you're getting a piece of bad news, you realize i'm going to be giving folks more bad news in the morning coming up for next quarter. i want to bring back the panel. gary, i want to talk about edward lawrence. we lost his shot earlier. he said he spoke with treasury secretary steve mnuchin this morning and basically mnuchin said if we have to increase the size of the main street lending facility we'll add more money to it. the bazooka is out, the bazooka is going on the line, gary. >> it is more than than a bazooka. let me state emphatically they will have to add more money. i speak to ton of small businesses have not gotten a dime and getting nothing back from their banks. in my little locality, bunch of

restaurants are out of business for good. a lot of people out of jobs, on unemployment and don't know if they will get jobs, times that by all places around the country. i suspect we have not heard the last from mnuchin, the president around the rest. i suspect there will be more big bucks. the necessity is a bridge to get past the pandemic. not necessarily what powell's doing but we need the bridge or else, it will be very tough toe come back for many people. cheryl: keith a lot of this, this is the being pointed out as well supplements the ppp people i think in their mind separate the ppp from what treasury is doing but they're working hand in hand. mnuchin and powell are working hand in hand and also, heather, i'm curious to see what he says about consumer behavior and spending, to the point we made on the show, 70% of the economy is consumer spending and they will not want to go out and spend this summer, maybe not this fall, they will not want to get on a plane, they will not

want to go to a restaurant what does powell say about that? go ahead. >> this is the challenge, this is where main street has got to meet wall street has got to meet the fed. so far we have not seen the integration of this. you still have millions of people hurting, really hurts, out of work, unable to get a job, companies gone forever. that part, that loop has not been closed yet. until that loop gets closed well-not have any hard answers. this really is, never mind the coronavirus this, is all about the psychology of america. this more than anything, in my opinion plays into the recovery. cheryl: heather, i mean, you know, we have to talk about the federal deficit. we're talking about the fed's balance sheet pushing 7 trillion. i have seen estimates it will hit 10 trillion next year. gary k. is looking 16 trillion. that is astonishing number, heather. also the federal debt being taken on this country, that affects the credit rating of the united states. >> it absolutely does but even

people in this dire health crisis we have, larry kudlow as well as treasury secretary steve mnuchin and a republican administration, republican-led administration are saying now is not the time to worry about debt and deficits. i get it. there is a lot of pushback, i'm expecting from someone like you, gary, especially. i do not believe the time is worry about it, fiscal an monetary stimulus both combined in tandem is way to approach the crisis. call it a big bazooka or whatever you want but they are doing the right thing. cheryl: we have to come up with a new word besides bazooka to your point, but danielle, i go back to the issue, this happened on monday, they're talking about helping states, cities, municipalities, a lot are struggling. they have no tax revenue coming in. now the treasury will backstop them as well as the etf market as well as buying mortgage-backed securities and treasurys. what else can they do? is there anything else they can

buy? >> i will try my best to get away from from the bazooka analogy but right now they are shooting blanks. somebody at the press conference needs to ask powell. they have laundry list of facilities, but only two are deployed and put into action, the money market fund facility and commercial paper facility. what i want to know when -- i don't need to know the main street lending facility will get bigger. i need to know when it will get deployed and when the fed will stop shooting blanks when it comes to what they're supposed to be doing for what we know is unmet need? when it comes to the stock market and the credit market and junk bonds, that all rebounded just from the fed's lip service but small businesses can't rebound via lip service, they can't. so what a reporter in that rooms needs to ask, not how big the main street lending facility is going to be but when they're going to deploy it. cheryl: gary, i think that depend on the length of the virus. we don't know.

>> the virus is the economy and the economy is the virus and i can tell you all bets are off if we go three, six, months down the road and we're still not open up a decent amount on the business front. it is good to see some of it is going on right now but i can tell you what is going on right now will not be enough to save the day. we're going to need a good 25, 50% minimum. i have to fly up to new york city in the next couple of weeks. they only have one flight a day up there. they used have 20 or 30 flights a day, and there is 20% full. that cannot continue or else. so much debt on books of these corporations. i had to do a little thing on ford yesterday, and i looked to see what they have on debt. they have $155 billion in debt. there is no way they can go too long, too far without selling a lot of trucks, without that debt coming home to roost. i think there is a lot more out

there. so time is quite valuable as we move forward. cheryl: i remember my mother always told me, don't rack up the debt, cheryl but oh, well. here we go as a nation racking up debt. like there is no tomorrow. danielle, gary, heather, keith, guys, thank you so much for all of you for breaking news coverage. also to lauren simonetti, edward lawrence for the decision. thanks, guys. we are watching markets as jerome powell is about to hold the news conference. he will be speaking in about 12 minutes from now. now they did hold rates steady a month after they slashed rates near zero in unprecedented move was not even a meeting move, remember that. we'll be talking about, leading you up to jerome powell's comments when we come back. stay with us. ♪.

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any fauci as he sat along president trump, that gilead drug remdesivir specifically related to treating covid-19 patients in hospitals. dr. fauci touted that test as quote, highly significant. he says it is a very important proof of concept that shows a drug can block the virus. fauci did stress this woe not be a vaccine but could be a potential building block to treat patients. >> but we think it is really opening the door to the fact that we now have the capability of treating. and i can guaranty you, more people, more companies, more investigators get involved it will get better and better. reporter: now the news on gilead shot the market up on day we learned the first quarter contracted by 4.8%. president trump though says he still believes there is a feeling of optimism right now in the country. >> i think next year all of the

fruits of what we've all done together between the doctors and the business people, all of the work from the task force, all of the people that have worked so hard, we're going to have a tremendous year next year and, you are going to start to see that i think in the fourth quarter, maybe even in pieces of the third quarter. reporter: cheryl, later this afternoon at the white house in the 4:00 hour president trump is set to sit down with executives in the hospitality, moves and automotive industries. cheryl. cheryl: blake burman life for us out of washington. blake, thank you very much. look at markets again. we are really soaring. we're five minutes away from fed chair jerome powell. he will answer questions. that could move the markets. bring in danielle dimartino booth and jeff saut and ken mahoney. greathave you joining the

conversation. ken to you, powell said in the statement, whatever it takes what do you want to hear from him when he starts to answer questions? >> along the same line. we used ba cook -- bazooka and i used thesaurus can we use cannon? cheryl: cannon is okay. >> it is about companies being able to go to markets to borrow. last week we heard delta saying we need $100 million a day, that is burn rate. bring it down to 50 million. when we talk about credit facilities and how will dealt delta and other stricken airlines to raise capital? we're talking about flushing money into higher risk assets, making sure bond market works that the corporations can go there to borrow and be able to conduct business. >> is for now. that is why they took the unprecedented action back in march, they say, they saw the

health of the bond market in particular. treasuries started to tighten up. that was a bad thing, jeff. at the same time, danielle brought this point up earlier how long will they keep this type of buying? that is the unknown? >> well, our models called the downturn in mid-january and called the upturn in mid-march. they still say we're probably going up into mid-may. then we'll run into a rough patch through the summer as the economic data comes in. but i disagree with my friend gary because i think, what's going on in our neighborhood, people are restaurant deprived. i think when restaurants reopen i think you will see a big surge in economic activity. so i think that is what the stock market is sniffing out. at least in the mid-may. again, when the economic data starts coming out, it will look pretty bad. i think it is a transitory thing and, i agree with the president.

i think the third and fourth quarters of this year will look pretty good. cheryl: danielle, do you agree with that assessment? >> no, i'm afraid i don't. you have to bear in mind that one in 10 employees worldwide was employed in the travel and tourism sector. while i do agree there is definitely a pent up need to get out of the house, there will be people who return to restaurants, i think some of the spacing, social distancing, restrictions that are going to be in place are going to limit the upside potential of the economy and have it look more like a protracted u and in addition to that, we know that 58% of small businesses already pushed through with layoffs in the country and it going to take some time to get these people back on payroll and even more time to get the family going to orlando to go to disney or to even get on an airplane. cheryl: or billy bob's in fort worth, danielle. >> or billy bob's.

i knew the texan would come out in you at some point, absolutely. >> governor abbott says let's start to open up. you're right about the pent-up demand. 10 back to the issue of consumer behavior, he will be asked about that for sure from a reporter today. >> look the stock market has done a v-shaped recovery. i don't think the economy will do that. the economy will be different than the the v-shaped recovery. if we're sticking to w. there are some dislocations. we never done this before. we'll not go a, b, c. a. to l, and consumers will rush to restaurants but others will stay backing you know what? i'm still not sure about this infection where it goes. i think there will be a lot of false starts. i hate to be like that. the market is ahead of itself. at the end of the day i think economy has fits and starts, something we've never been through before. again it will be really unbalanced way we look at it.

cheryl: jeff, how much faith do you have the virtual press conference with the chairman will go off as planned? i wonder if we get to see technical difficulties. we haven't seen this before. this is something new. >> again, i think the economy rebound will be stronger than danielle, my friend danielle. and i think stock market is ahead of itself but i think it is going to trade higher into may where i think you're going to get a interimmediate term trading top. i think you will go into a rough patch over the summer. but then by the time you get to september, october, i think market's going up and i think we'll be somewhere between 3400 and 3600 by year-end on the s&p 500. cheryl: danielle, i have got about 30 seconds we think until jerome powell takes to the virtual meeting q&a. final thoughts? >> look, as i said earlier what i want to know from the fed right now is what the fed is going to do to help the little guy? they have already helped the big

guy. they already helped the investor. they bailed out the speculator and the hedge fund. i want to know from jay powell what he will do for small business in america today. cheryl: obviously a big piece of that, is the ppp is connected to the federal reserve and the treasury. i'm not smart enough to make that connection in five seconds but we shall see. anyway, let's take a look at virtual q&a with jay powell. >> begin by acknowledging the tragic loss and tremendous hardship people are experiencing here in the united states and around the world. the coronavirus is first and foremost a public health crisis. the most important response from those in the front lines, hospitals, emergency services, care facilities. on behalf of the federal reserve let me express our sincere gratitude to those dedicated individuals who put themselves at risk day after day in service to others and to our nation. the forceful measures that we as a country are taking to control

the spread of the virus brought much of the economy to an abrupt halt. many businesses have closed, people have been asked to stay home and basic social interactions are greatly curtailed. people are putting their lives and livelihoods on hold. at significant economic and personal cost. all of us are affected but the burdens are falling most heavily on those least able to carry them. it is worth roesching that the measures we're taking to contain the virus represent and investment in our vivid and collective health. as a society we should do everything we can to provide relief to those who are suffering for the public good. while many standard economic statistics have yet to catch up with reality we're experiencing, it is clear that the effects of the on the economy are severe. millions of workers are losing their jobs. next week's jobs report is expected to show the unemployment rate which was at 50-year lows just two months

ago, as surged into double digit. household spending has plummeted as people stay home and measures of consumer sentiment have fallen precipitously. hotels, airlines, restaurants, department stores, and other retailers have been particularly hard hit. manufacturing output fell sharply in march and likely to drop even more rapidly this month as many factories have temporarily closed. overall economic activity will likely drop at an unprecedented rate in the second quarter. inflation is also being held down, reflecting weaker demand as well as significantly lower energy prices. both the depth and the duration of the economic downturn are extraordinarily uncertain and will depend in large part on how quickly the virus is brought under control. the severity of the downturn will also depend on the policy actions taken at all levels of government to cushion the blow and to support the recovery when the public health crisis passes. federal reserve's response is

guided by our mandate to promote maximum employment and stable prices for the american people along with our responsibilities to promote the stability of the financial system. we're also committed to using our full range of tools to support the economy in this challenging time. last month we quickly lowered our policy interest rate to near zero. we stated then and again today we expect to maintain interest rates at this level until we're confident the economy has weathered recent events and is on track to achieve our maximum employment and price stability goals. of course lowering interest rates cannot stop the sharp drop in economic activity caused by closures and other forms of social distancing and low rates will not effectively spur the economy if those rates do not feed through to broader financial conditions or if households and businesses are unable to get credit. the economic disruptions caused by the virus created tremendous strains in some essential financial markets and have impaired the flow of credit in the economy.

without access to credit families can be forced to cut back on necessities and could lose their homes. businesses can be forced to downsize or close, resulting in further losses of jobs and incomes and worsening the downturn. preserving the flow of credit is thus essential for mitigating the damage to the economy and setting the stage for the recovery. we have been taking broad and forceful actions to these ends. to support the flow of credit to households and businesses, foster smooth market functioning and promote effective transition of monetary policy to broader financial conditions we have been purchasing large amounts of treasury and agency mortgage-backed securities. the markets for these securities play a critical role in the economy and they came under great stress last month as the scale of economic disruption became clearer around as investors clamored for liquidity. our purchases have helped market conditions improve substantially in recent weeks. in light of this improvement, we

have slowed our pace of purchases. we will continue our purchases of treasury and asia -- agency mortgage-backed securities as needed. while the primary purpose much these purchases to ensure smooth market functioning and effective policy transition, the purchases will offer, accommodating more financial conditions. we're also undertaking programs to provide stability to the financial system and more directly support the flow of credit in the economy, for households, for businesses of all sizes and for state and local governments. these programs benefit the economy by providing financing where it is not otherwise available. in addition by serving as a backstop to key credit markets the programs can improve market functioning by increasing the willingness of private lenders to extend credit. many of these programs rely on emergency lending powers that are available only in very unusual circumstances such as those we find ourselves in

today. we are deploying these lending powers to an unprecedented extent, enabled in large part by the financial backing support from congress and treasury. we will continue to use these powers forcefully, proactively, and aggressively, until we're confident that we are solidly on the road to recovery. i would stress that these are lending powers and not spending powers. the fed cannot grant money to particular beneficiaries. we can only make loans to solvent entities that, with the expectation that the loans will be repaid. many borrowers will benefit from our programs as will the overall economy. but for many others getting a loan that may be difficult to repay may not be the answer f these cases direct fiscal support may be needed. elected officials have the power to tax-and-spend and to make decisions about where we as a society should direct our collective resources. the cares act and other legislation provide direct help

to people, businesses and communities. this direct support can make a critical difference not just helping families and businesses in a time of need but also in limiting long-lasting damage to our economy. at the fed we're doing all we can to help american families and businesses weather this difficult period. when the spread of the virus is under control, businesses will reopen and people will come back to work. we have will continue to use our tools to assure the recovery, when it comes, will be as robust as possible. thank you. i will be glad to take your questions. >> hi, tina. reporter: share powell, you guys cut rates to zero, buying huge quantity of government debt. i guess question what more can you realistically do and where do you see the need for congress to step in? >> so, let me say that we're

committed to using our full range of tools to support the economy in this challenging time. we're going to use them as i mentioned forcefully, proactively and aggressively, until we're confident we're solidly on the road to recovery. and also to assure that recovery when it comes will be as robust as possible. as long as needed we'll use them and, i would just say we have number of dimensions on which we can still provide support to the economy. as you know our credit policies are not subject to specific dollar limit. they can be expanded as appropriate and we can do new ones. so we can continue to be part of the answer. will there be a need to do more though? i think the answer to that will be yes. i would say congress has also reacted quite aggressively and strongly with the cares act and other, other laws, several other laws and that's appropriate with enhanced unemployment insurance and paycheck protection program,

we seen an extraordinarily large reaction but i would say that it may well be the case that the economy will need more support from all of us if the recovery is to be a robust one. >> nick timros. reporter: thanks, chair powell. nick timros of "the wall street journal." ii want to follow up on jenna's question. what specifically do you think elected officials should consider in order to help return, or hasten a stronger return to full employment? and what policy tools did you discuss at your meeting today that might be used to stop a deflationary spiral? >> so, let me start, i will take the questions in the order that you gave them. in terms of, if i can say,

legislative priorities, we don't, we're not responsible for fiscal policy. those will be decisions for congress to make but i would say that policies that protect workers, businesses, and households from avoidable insolvency, that keep businesses going, to they're able to produce goods, or hold on to employees or quickly rehire them. those will be key policies and they will come with a hefty price tag but we'll come out of this event eventually, with a without long-term damage to the economy. that is really the thing that congress could do over time. in terms of what we can do i mentioned, we have our credit facilities, are wide open. we can do more on that front. in addition, we've had, we've had extensive discussions as i mentioned, done a lot of thinking about what monetary policy might look like in coming month over a range of potential

scenarios for the economy. we do think there are, our policy stance today is right where it should be for now. as you know we cut rates to the effective lower bound and we've said that we will keep them there until we're confident that the economy has weathered the effects of the outbreak and is on track to achieve our goals. with asset purchases we're continuing to purchase treasury securities and agency mbs in the amounts needed to support smooth market functioning. so we're doing those things and i will say we'll continue to use our tools as needs be. >> steve liesman. reporter: mr. chairman, steve liesman with cnbc. i've got two questions here. first of all, why aren't you announcing or conducting a specific quantitative easing program? and maybe you could explain what

the context is now of the purchases that will be made and amounts that are to come? the second question i have is, is the federal reserve really taking enough risk to help households and businesses here in that you just said the programs that are out there may be best for those who are able to repay loans. don't you have a series of programs essentially lending only to those able to repay, which is essentially helping those who may need it the least? thank you. >> so, let me say again, in terms of asset purchases and other measures we do think our policy stance is appropriate now. we've had discussions as i mentioned over time and done quite a bit of thinking about what we might do in the future. we think for now our policy stance is appropriate. we'll not change it now. we're really it waiting to see more from the economy. there is a range of potential past the -- paths the economy could be on. as the time approaches forward,

we'll address your first question, which is about asset purchases. that is not something we're doing today. it's, it's something that we have talked about and you know, for now, we like your current policy stance. in terms of risk, so, you know, the, we operate under the laws that congress passes and there are a number of aspects under section 13.3. you can see they permitted us to i think move very quickly and move into areas where we've never been before and do so quite aggressively. so i think we're going places and providing help in places where we never have, and i'm glad that we are. i think it is appropriate that we are. nonetheless, these are lending powers. if you read section 13.3 of the dodd-frank or of the federal reserve act, and i know you have, it does require that we be secured to our satisfaction and,

and we can't lend to insolvent companies. it is clear, these are lending powers. we are ultimately bound to implement the laws that congress gives us. we do not make grants. we can't make grants. the reason i raise that in my remarks is that i just want to be clear on that. we can do what we can do, and we will do it to the absolute limit of those powers. we'll keep at it. and i just want people to know, we will be at it with the legal authorities that we have until we get through this thing. we will keep using our authorities, but there are authorities that we don't have and, there may be a need for those authorities to be used as well as ours. >> heather long. reporter: hi, chair powell. it is heather long from "the washington post." i have two questions for you,

both on timing. the first, do you plan to launch the corporate credit facility and the main street lending facilities in may or early may? anything you can give us a sense on timing? and the second, in the statement you referred today to the fomc refers today to a lot of medium term risks from the pandemic. that sounds like you all think this is going to be a long recover i are, a long road to recovery. can you give anymore guidance how you all see this recovery taking shape? thanks. >> so, in terms of these facilities, the corporate credit facilities are, are near being finalized and will be operating, i would say soon, fairly soon. main street facility is, we're close to announcing, to issuing new term sheet. as you know we put out a term sheet a while back. we got a couple thousand

comments. we carefully studied them. we tried to reflect those in what we're doing now. in terms of main street there will be at least a couple of different kinds of lending going on there. this is a broad area of the economy with many different kinds of credit needs, so we're going to keep at that for some time, adding in sectors and lending products. so i think we'll be at, probably be continuing to work and expand main street for some time. it won't be done quite as quickly. the first part of the it i think will be done fairly quickly. in terms of our statement what we said, i will read the sentence, ongoing public health crisis will weigh heavily on economic activity and inflation in the near term and poses risks on the economic out look in the medium term. what we meant by that, over the medium term, obviously what we're talking about right now, in the very near term, now and long term, so the next year or so. i would point to a couple of

risks to the outlook, what we were thinking of. first just the virus. how long will it take to get it under control. will there be additional outbreaks. can there be drugs that treat it or vaccine of some kind? all of that is very much shrouded in uncertainty. the second issue, this is a very substantial one, is just the possibility of damage to the productive capacity of the economy, through a couple of channels. the first is just workers who, if, one is unemployed for an extended period, that person can lose the skills that are needed, can lose touch with the labor force, and have difficulty restarting his or her career. so that's, that's a feature of deep and long recessions and that is something we've got to watch out for. another is just businesses. these thousands of great medium and small-sighed businesses we

have all over the country they're worth so much more to the economy than the sum of their net assets. they contain, they're jobe creators, they're really important, and if we see unnecessary insolvencies a wave of those, that could be damaging to the performance of the economy over time. so the good news we have policies as i mentioned in my remarks, we have policies that can address those things but not perfectly. so that's another risk. the third thing i would point it is just the global dimension. this is a very global phenomenon and you are, we're seeing economic data from around the globe which is very, very negative and that too can weigh on u.s. economic performance over time. you know, i would say just on the u.s., on the u.s. economy, there are things you can say, one can say. the first is that in the near term we're going to see significant declines in economic activity, significant declines

in employment and increases in unemployment. we're going to see that as a consequence of the virus and measures we're taking to protect ourselves from it. the next phases, are more uncertain, highly uncertain. but we will go through a phase starting fairly soon where we begin to reopen the economy and probably the economic activity will pick up as consumer spending picks up. consumer spending as i mentioned gone down quite a lot. it will begin to pick up as people start to return to the normal patterns of spending, but the chances are that it won't go back right to where we were because people will until they're confident of, that the virus is well and truly under control, then, they will be somewhat probably reluctant to undertake certain kinds of activities. it may take some time for us to get back. it probably will take time to get back to a more normal level of unemployment and ultimately maximum employment.

>> james -- [inaudible] reporter: thanks, chair powell. you didn't firm up your guidance, this is james palady from "the financial times." you didn't firm up the guidance on interest rates at this meeting. given the risks you just outlined, under what circumstances would you strengthen the fed's commitment to keep rates at the lower bound and is there any danger to delaying that plan? to the credit facilities what demand are you expecting for programs that were set up under the cares act, and are you expecting them rapidly toy reach capacity like the ppp plan did? >> on the first, as i mentioned we moved very quickly, very aggressively. we were first to return to effective lower bound where we are now. we got there effectively right away. we think that is the right place

to be. if you look at surveys, market pricing, the market expects us to be there for a good while and that's appropriate. so you know, it is not as though the market is pricing in a near-term lift i don't have or anything like that. we're not going to be in any hurry to draw these measures or lift off. we're going to wait until we're quite confident that the economy is well on the road to recovery. so we don't see, we see our current stance and our current guidance, i would say the same thing about asset purchases, we see them as appropriate. i have also mentioned a couple of times, we have done a lot of thinking about what monetary policy might look like over coming months and that would, you know, depend on where we are in a range of potential economic scenarios. we were think about that all the time, but right now, for now, we think our current stance is appropriate, so we made no

change in it today. second question was, how, so, thing about our facilities is treasury still has plenty of equity. so we've said that if, if demand for our facilities is greater than we've estimated, then we'll expand them and we have the ability to do that. so it won't be the way the paycheck protection program is, where there is a specific amount allocated, appropriated for it and then there is no more money. that will, be unlikely to happen here unless we exhaust treasurys and we're a long way from doing that. the second thing i would say, and you've all seen this, when we announce these facilities, i mentioned this in my remarks, it is not just the actual lending we do. we build confidence in the market and private market participants come in and many companies that would have had to

come to the fed have now been able to finance themselves privately since we announced the the initial term sheet on these facilities. so that's a good thing. companies are out there financing, raising liquidity. we haven't made any corporate loans in those facilities. we made short term money market loans but we haven't made any of them but yet there is tremendous amount of financing going on and that's a good thing. for that reason, the ultimate demand for the facilities is quite difficult to predict because there is this announcement of course we have to follow through, though and we will follow through to validate that announcement effect. >> howard snyder. >> hi. thanks for doing this. i wanted to get a little more expansion on the timing of recovery and the connection between the health response.

you said earlier i think that you thought the second half of the year could see a pretty robust rebound. is that now out of the question and do you think a steady recovery is really possible until a vaccine is developed given the patchwork of measures we have seen taken around the states? is that going to really lead us to a steady path out absent a vaccine? >> you know, as you know, economic forecasts are always uncertain. today, they are unusually uncertain and that's really because so much of the performance of the economy depends on the path of the virus, and the success of the measures we take to control it. our success in reopening the economy and also the time it takes to develop new drugs. in our tools, the things that we do don't affect any of those things. we're not experts on those things, either, but what the experts tell us is that the outcomes are highly uncertain. so this is an unusually new kind of uncertainty added on top of our regular uncertainty. but i will say, i think there

are a few things you can say about the path ahead. first, this time now is going to be a time of sharp contraction in economic activity, high unemployment, personal consumption expenditures have declined sharply, business investment as well, unemployment moved up. we are going to see economic data for the second quarter that's worse than any data we have seen for the economy, and they're a direct consequence of the disease and the measures we are taking to protect ourselves from it. so then we will enter this new phase and we are just beginning to maybe do that, where we will, formal measures that require social distancing will be rolled back gradually and at different paces in different parts of the country, and in time, during this period, the economy will begin to recover. people will come out of their homes, start to spend again, we will see unemployment go down, we will see economic activity pick up.

and you know, when will that be? it's very hard to say. let's just say for this purpose that it's in the third quarter. so as i mentioned earlier, that could be a fairly, you know, large increase, given the size of the fall, the increase could also be substantially large, although it's unlikely that it would bring us quickly, quickly all the way back to pre-crisis levels. of course, this is the period as well that carries the risk of new outbreaks of the virus, something we really want to avoid. i think then, after that period, at some point you will have, you know, the kind of formal social distancing measures will be gone but you will still be left with probably a level of caution on the part of people who will worry and probably keep worrying for some time. you would think behavioral change, as people gain confidence, so the sooner we get the virus under control, the sooner people can regain that

confidence and regain their economic activity. i think trying to be really precise about when that might happen and what the numbers might look like is -- i think it's very tough to do that. >> steve matthews. >> steve matthews with bloomberg. chairman powell, you have noted a number of times over the last year that there's been a broadening out of job gains with marginalized workers, people have been left out of the recovery over the ten-year period, finally making job gains and particularly minorities but also many other workers. do you worry that this recession is going to fall hardest on those workers who struggled and just got job gains in the last year or two, in that it may take years from now before there are opportunities for them again? >> yes.

that's exactly what i worry about. so unemployment has tended to go up much faster for minorities and for others who tend to be at the low end of the income spectrum, and it tends to come down faster as well but it tends to go up faster and be much, much higher. and we were in a place only two months ago, we were well into beginning the second half of the 11th year is where we were, and every reason to think that it was ongoing. we were hearing from minority -- low and moderate income and minority communities that this was the best labor market they have seen in their lifetime, all the data supported that as well, and it is heartbreaking frankly to see that all threatened now. all the more need for our urgent response. and to do what we can to avoid longer run damage to the economy

which is what i mentioned earlier. this is an exogenous event that you know, it happened to us, it wasn't because there was something wrong with the economy, and i think it is important that we do everything we can to avoid that longer run damage and try to get back to where we were, because i do very much have that concern. i think everyone is suffering here, but i think those who are least able to bear it are the ones who are, you know, losing their jobs and losing their incomes and have little cushion to, you know, to protect them in times like that. so yes, that's a very big concern. >> victoria. >> hi. victoria guido with politico. the paycheck protection program has experienced logistical problems because of the speed at which all this is happening.

for the main street lending facility which will also work through banks, what lessons are you taking away from that, and then more broadly, you know, you mentioned earlier [ inaudible ] was on an unsustainable path and i'm wondering for republicans that are starting to get worried about how much fiscal spending they are having to do in this crisis, you know, whether that should be a concern for them. >> so a couple things. this is different from the ppp, paycheck protection program, in two ways. one, these are not grants. these are loans. so i don't know that the demand will be quite as strong as it has been for the ppp. i don't know that. the second thing is we won't run out of money. it's not a limited pot so there won't be this incentive to try to get there first and that sort