Yet the Fed is unlikely to unveil any new emergency programs. Fed officials have already taken a range of extraordinary actions that have propelled them into new corners of the economy and elevated their bond-buying to new heights.
The central bank has already slashed its benchmark interest rate to near zero and escalated its purchases of
“The fact that they are operating in those markets is unprecedented," said
Yet this crisis is unlike any other, and it comes against a backdrop of horrific economic data. More than 26 million Americans have sought unemployment benefits since the viral outbreak shuttered much of the
Economists have forecast that the economy may be shrinking at an annual rate of between 30% and 40% in the current quarter and that the unemployment rate could range as high as 20% for April. That would be the highest jobless rate since it was 25% during the Great Depression.
As economic activity has collapsed, inflation has also begun to fall. Economists expect it to drop below 1% by next year, far under the Fed’s 2% target level. That poses another problem for the Fed: Declining prices can eventually lead consumers to delay spending, thereby slowing the economy further.
Economists will be parsing the words in the Fed's policy statement and in Powell's news conference for any hint of a policy shift on rates. At its meeting last month, the Fed had said it will keep rates near zero “until it is confident that the economy has weathered recent events.”
In the past, the central bank has sometimes set a time frame for future rate hikes In other cases, it has set out conditions, such as having the unemployment rate fall to a certain level before the Fed would consider raising its benchmark rate. But few analysts forecast anything specific Wednesday.
Earlier this month, as part of a
These loans are intended to support mostly companies that are too large for the government’s small business lending program, which targets those with fewer than 500 workers. Companies that borrow from the
Still, neither the municipal or
Powell will also likely face questions about the challenges raised by these new programs. They have exposed the central bank to concerns that it will inevitably favor some companies or municipalities over others.
It has come under pressure from
Doing so, though, would likely spur other industries to ask for similar help.
“Why oil and not hospitality? Or some other sector?” Sheets said.