MNI TRANSCRIPT: Powell on Corporate Facilities, Outlook

     WASHINGTON (MNI) - The following is the portion of a transcript from

Federal Reserve Chairman Jerome Powell's press conference Wednesday:

     Q: 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? The second, in the

statement, you refer today 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

recovery, a long road to recovery. Can you give any more guidance on how you all

see this recovery taking shape? Thanks.

     A:In terms of the facilities, the corporate credit facilities are near

being finalized and will be operating I would say soon, fairly soon. Main street

facility is, we are close to announcing, to issuing a new term sheet. We put out

a term sheet for comment a while back and we got a couple thousand comments. We

have carefully studied them. We have tried to reflect those in what we are doing

now. I think with 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. We are going to keep at that for some time, I

think, adding in sectors and lending products. I think we will be at, we will

probably be continuing to work and expand main street for some time but it won't

be done as quickly. But the first part of it will be done fairly quickly. In

terms of our statement, what we said was that, I'll read the sentence, ongoing

public health crisis will weigh heavily on economics activities, in the near

term and poses considerable risks to the economic outlook over the medium term.

What we meant by over the medium term, what we are talking about is not right

now in the very near term, it's between now and the long term. The next year or

so. I would point to a couple of risks to the outlook that what we were thinking

of. First is just the virus, how long will it take to get it under control, will

there be additional outbreaks, will there be drugs that can treat it or a

vaccine of some kind. All of that is very much shrouded in uncertainty. 

     The second issue and this is a 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 a 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. That's a feature of deep and

long recessions and that is something we have to watch out for. Another is

businesses. These thousands of great medium and small size businesses that we

have all over the country, they are worth so much more to the economy than the

sum of their net assets. They contain their job creators, they are really

important and if we see a unnecessary insolvency is a wave of those that could

be damaging to the performance of the economy over time. The good news is that

we have policies, as I mentioned in my remarks, policies that can address those

things. But not perfectly. That is another risk. The third thing I would point

to is the global dimension. This is a very global phenomenon, and we are seeing

economic data from around the globe which is very negative, and that too can

weigh on U.S. economic performance over time. I would say on the U.S. economy,

the things you can say, one can say, the first is that in the near term we are

going to see significant declines in economic activity, declines in employment,

increase in unemployment, we see that from the virus and measures we take to

protect 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 consumers spending

picks up. Consumer spending has gone down quite a lot. It will begin to pick up

as people start to return to their normal patterns of spending. But the chances

are that it won't go right back to where we were because people will, until they

are confident of that the virus is well and truly under control, then they will

be somewhat reluctant probably to undertake certain kinds of activities. It may

take some time for us to get back, it probably will take some time for us to get

back to a more normal level of unemployment, and ultimately to maximum

employment.

--MNI Washington Bureau; +1 202 371 2121; email: evan.ryser@marketnews.com

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