FILE PHOTO: President and Chief Executive Officer of the Federal Reserve Bank of Atlanta Raphael W. Bostic speaks at a European Financial Forum event in Dublin, Ireland February 13, 2019. REUTERS/Clodagh Kilcoyne/File Photo
(Reuters) – As U.S. officials role out trillions of dollars in new economic support, a Federal Reserve policymaker on Monday said focus will now shift to whether those programs prove adequate or need to be expanded even further.
U.S. elected officials last week approved a more than $2 trillion emergency economic program and the Fed is expected to layer on more than twice that amount in programs to keep borrowing costs cheap and ensure companies and families have access to credit needed to bridge the health crisis.
No one’s assuming it will be enough.
“What we are going to try to do is figure that out in the next couple of weeks,” Atlanta Fed President Raphael Bostic said when asked during a webinar on housing if the federal efforts approved so far are large enough to backstop an economy that may need to spend at least another month in a state of relative shutdown.
“If we are missing important parts of the economy I’d be very open to considering additional ways to support those parts of the economy…I view this as an emergency situation. All hands on deck. You do whatever you have to make sure we get through this as whole as possible,” Bostic said.
Fed staff will be looking at how broadly the programs announced so far are used, whether efforts are needed to encourage small businesses, for example, to take advantage of forgivable federal loans to maintain their staff, and what may have fallen outside the scope of Fed and congressional efforts so far.
Some analysts already suspect that the central bank may need to broaden its willingness to backstop corporate bond and lending markets to include firms with lower quality credit.
Bostic said that moving quickly to fix problems as they come up will be key to ensuring that the economic damage to an otherwise healthy economy is confined to the short term.
“This is quite different than any crisis we have had in the past…This is first and foremost a challenge in our public health system,” Bostic said. The fundamentals of the economy “are pretty good. If we can get through the crisis without having those fundamentals be seriously and permanently degraded there is some chance or hope that the economy can rebound quite rapidly.”
Reporting by Howard Schneider; Editing by Andrea Ricci