Powell Says Fed Not Out of Ammo

Q: With rates remaining at zero, only stimulus can come from fiscal side?

A: "I certainly wouldn't say that we're out of ammo. Not at all. We've got the lending tools. We've got the balance sheet. We've got further forward guidance. There's still plenty more that we can do....The idea being that policy will remain highly accommodative until the recovery is well along, really very close to our goals and then will remain accommodative even after, so I think that's a really strong place for rate policy to be but again, we have the other tools we can use, so certainly, we're not out of ammo".

Q: Are Fed actions more likely to produce asset price inflation than goods/svcs inflation?

A: Mon pol in past decade "notable for the lack of the emergence of some sort of a financial bubble, the popping of which could threaten the expansion. That didn't happen. And frankly, it hasn't really happened around the world since then. That doesn't mean that it won't happen but of course it's something we monitor carefully... it is something we monitor but I don't know that the connection between asset purchases and financial stability is a tight one, but, again, we won't be just assuming that. We'll be checking carefully as we go" .

The kinds of tools we would use to address those things are not really monetary policy. It would be more tools that strengthen the financial system.