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| Federal Reserve leaves US interest rates at record lows amid Covid-19 hardship - business live | Federal Reserve leaves US interest rates at record lows amid Covid-19 hardship - business live |
| (32 minutes later) | |
| US central bank says borrowing costs will remain at historic lows until America has weathered the coronavirus crisis | US central bank says borrowing costs will remain at historic lows until America has weathered the coronavirus crisis |
| On the other hand..... | |
| Fed chair Jerome Powell has brushed aside concerns that the US budget deficit is going to soar due to the cost of fighting the coronavirus pandemic. | |
| Powell stirringly insists that the priority is to use the “great fiscal power of the United States” to support the economy through the crisis. | |
| Then in time, perhaps “reasonably soon”, policymakers can think about a long-term way to get America’s fiscal house in order, he tells reporters. | |
| Jerome Powell cautions that there is even more uncertainty over the economic outlook than usual. | |
| But we do know some things. | |
| In the short term, the US faces a sharp contraction in economic activity, high unemployment, and lower consumer spending and business investment, he explains. | |
| But then the economy will start to recover. We don’t know when that will happen, but it could be in the third quarter of 2020 and it could be a rapid bounceback - but probably not back to pre-crisis levels quickly. | |
| However, Powell also points to the risk of a second wave of infections, and is unwilling to speculate on exactly how the recovery would pay out. | |
| Looking ahead, Jerome Powell warns that it will take “some time” for US unemployment to return to more normal levels. | |
| So the Fed is not in any hurry to withdraw its current support for the economy, he insists. | |
| Here’s a clip of Jerome Powell pledging to keep helping the US economy recover from the Covid-19 crisis. | |
| Jay Powell is then challenged for not taking enough risks to help the US economy. | |
| Q: Why is the Fed focusing its help on firms who they’re confident can repay loans - surely they need help less? | |
| Under US law, the Fed can’t lend to insolvent companies, Powell explains. | |
| Powell is now taking questions from America’s economics reporters, on a video conference call. | |
| Q: What more can the Federal Reserve to support the economy? | |
| Powell says the Fed will act “forcefully, proactively, and aggressively”, and then declares that even more measures may be needed - on top of its new lending programmes, credit facilities and asset purchase schemes. | |
| Fed chair Jerome Powell also warns that the US economy will suffer an ‘unprecedented’ plunge in activity in the current quarter (having already shrunk by 4.8% per year in the last quarter). | Fed chair Jerome Powell also warns that the US economy will suffer an ‘unprecedented’ plunge in activity in the current quarter (having already shrunk by 4.8% per year in the last quarter). |
| Federal Reserve chair Jerome Powell is holding a press conference now, to explain why the Fed left interest rates on hold. | Federal Reserve chair Jerome Powell is holding a press conference now, to explain why the Fed left interest rates on hold. |
| He begins by focusing on the Covid-19 crisis and the “tragic loss and tremendous hardship” being suffered by victims of the virus in America and across the globe. | He begins by focusing on the Covid-19 crisis and the “tragic loss and tremendous hardship” being suffered by victims of the virus in America and across the globe. |
| Powell expresses the Federal Reserve’s “sincere gratitude to those who put themselves at risk to help others”. | Powell expresses the Federal Reserve’s “sincere gratitude to those who put themselves at risk to help others”. |
| Turning to economics, he warns that the impact of the crisis is ‘severe’ - and not yet visible in the data. | Turning to economics, he warns that the impact of the crisis is ‘severe’ - and not yet visible in the data. |
| Next week’s US labor market report will show that the jobless rate has jumped to double-digits, he predicts, up from 50 year lows two months ago. | Next week’s US labor market report will show that the jobless rate has jumped to double-digits, he predicts, up from 50 year lows two months ago. |
| Here’s the key line from the Federal Reserve tonight: | Here’s the key line from the Federal Reserve tonight: |
| Newsflash: America’s central bank has voted to leave interest rates at their current record lows, and dropped a clear hint that they’re not moving soon. | Newsflash: America’s central bank has voted to leave interest rates at their current record lows, and dropped a clear hint that they’re not moving soon. |
| The Federal Reserve left its headline Fed Funds rate at 0%-0.25% -- maintaining its emergency rate cut of Sunday 15th March. | The Federal Reserve left its headline Fed Funds rate at 0%-0.25% -- maintaining its emergency rate cut of Sunday 15th March. |
| The Fed’s FOMC committee says that rates will stay there until the economy has weathered recent events, and is on track to hit its employment and inflation goals. | The Fed’s FOMC committee says that rates will stay there until the economy has weathered recent events, and is on track to hit its employment and inflation goals. |
| The FOMC also warns that America’s public health crisis is weighing heavily on the economy, and poses a “significant risk” to the outlook in the medium term. | The FOMC also warns that America’s public health crisis is weighing heavily on the economy, and poses a “significant risk” to the outlook in the medium term. |
| It warns: | It warns: |
| Here’s our news story on today’s markets rally: | Here’s our news story on today’s markets rally: |
| Over at the White House, health advisor Dr. Anthony Fauci has told reporters that the latest tests of remdesivir on Covid-19 patience showed “quite good news”. | Over at the White House, health advisor Dr. Anthony Fauci has told reporters that the latest tests of remdesivir on Covid-19 patience showed “quite good news”. |
| Fauci said he was told data from the trial showed a “clear cut positive effect in diminishing time to recover.” | Fauci said he was told data from the trial showed a “clear cut positive effect in diminishing time to recover.” |
| CNBC reports: | CNBC reports: |
| As flagged earlier, Gilead said those tests showed that half the severely ill patients treated with remdesivir recovered and were released from hospital within two weeks. | As flagged earlier, Gilead said those tests showed that half the severely ill patients treated with remdesivir recovered and were released from hospital within two weeks. |
| However.... according to the AFP newswire, another test has not gone so well. | However.... according to the AFP newswire, another test has not gone so well. |
| This is from our main coronavirus liveblog: | This is from our main coronavirus liveblog: |
| Bloomberg’s John Authers has an interesting theory about the market rally. | Bloomberg’s John Authers has an interesting theory about the market rally. |
| He suspects that investors are piling back into riskier assets because they’re less worried that they’ll catch Covid-19 themselves, rather than really thinking about the wider economic damage being caused. | He suspects that investors are piling back into riskier assets because they’re less worried that they’ll catch Covid-19 themselves, rather than really thinking about the wider economic damage being caused. |
| He writes: | He writes: |
| Here’s the full piece- well worth a read. | Here’s the full piece- well worth a read. |
| UK pub chain Wetherspoons has told the City tonight that it expects to keep its pubs closed until late June. | UK pub chain Wetherspoons has told the City tonight that it expects to keep its pubs closed until late June. |
| It made the prediction as it announced a new equity placing to raise £140m, to tide it through the lockdown. | It made the prediction as it announced a new equity placing to raise £140m, to tide it through the lockdown. |
| Wetherspoons argued that it is relatively well-placed to handle social distancing rules, once restrictions are eased. | Wetherspoons argued that it is relatively well-placed to handle social distancing rules, once restrictions are eased. |
| However... the government hasn’t yet said when it will start to lift the current lockdown, and many analysts suspect pubs will not be the first places to reopen either. | However... the government hasn’t yet said when it will start to lift the current lockdown, and many analysts suspect pubs will not be the first places to reopen either. |
| A dozen European Union member states have called for a relaxation of air-passenger rights rules to help airlines deal with the economic fallout from coronavirus. | A dozen European Union member states have called for a relaxation of air-passenger rights rules to help airlines deal with the economic fallout from coronavirus. |
| France, Poland, the Netherlands and Ireland are among the 12 countries who have proposed amending EU rules, so airlines can reimburse cancelled tickets with vouchers, rather than cash. | France, Poland, the Netherlands and Ireland are among the 12 countries who have proposed amending EU rules, so airlines can reimburse cancelled tickets with vouchers, rather than cash. |
| Air-France/KLM and Lufthansa are currently negotiating government bailouts, while British Airways has announced plans to make 12,000 employees redundant, as the virus has brought international travel to a near standstill, leaving planes grounded. | Air-France/KLM and Lufthansa are currently negotiating government bailouts, while British Airways has announced plans to make 12,000 employees redundant, as the virus has brought international travel to a near standstill, leaving planes grounded. |
| The 12 member states argue the requirement of a 2004 EU regulation to reimburse cancelled flights in cash is adding to airlines’ cash-flow problems. | The 12 member states argue the requirement of a 2004 EU regulation to reimburse cancelled flights in cash is adding to airlines’ cash-flow problems. |
| The joint statement calls on the European commission, which oversees EU law, to urgently amend the law, declaring: | The joint statement calls on the European commission, which oversees EU law, to urgently amend the law, declaring: |
| The EU’s 27 transport ministers are holding a conference call to discuss an exit from current restrictions. So far the commission has declined to say publicly whether it backs the voucher plan. | The EU’s 27 transport ministers are holding a conference call to discuss an exit from current restrictions. So far the commission has declined to say publicly whether it backs the voucher plan. |
| European commission vice president Vĕra Jourová told reporters earlier today. | European commission vice president Vĕra Jourová told reporters earlier today. |
| But her colleague in charge of transport, Adina Vălean, has previously said airlines can only offer vouchers if passengers can accept them. | But her colleague in charge of transport, Adina Vălean, has previously said airlines can only offer vouchers if passengers can accept them. |
| Ministers are also looking at what green strings should be attached to airline bailouts. France’s transport minister Élisabeth Borne has said government aid for Air France would be linked to cutting pollution, including a 50% reduction in CO2 emissions by 2024 for domestic flights and fleet renewal to cut total emissions. | Ministers are also looking at what green strings should be attached to airline bailouts. France’s transport minister Élisabeth Borne has said government aid for Air France would be linked to cutting pollution, including a 50% reduction in CO2 emissions by 2024 for domestic flights and fleet renewal to cut total emissions. |