In the face of the growing economic crisis, Eric Rosengren, Chief Executive Officer of the Federal Reserve Bank of Boston, gave a positive assessment of the US economy, saying that it will "powerfully return", as the US can definitely withstand the short-term damage caused by the coronavirus pandemic.
"At some point, the US economy will return powerfully," he said in a phone interview with Bloomberg News on Thursday.
Nevertheless, Rosengren admitted that the coronavirus caused "a real economic shock."
"We are already seeing initial claims grow, and we are likely to see many more layoffs over the next few weeks, as it becomes clear that firms will not be able to open up quickly," he said. "While this is a concern, we hope that this is a short-term period in which we can maintain the stability of financial markets, and the US economy should be OK over time."
Over the past two days, Following its sudden decision to lower interest rates to near zero, as well as start buying bonds worth at least $ 700 billion to support the US economy, the Fed has introduced three more emergency lending programs to help the credit markets function.
Because of this, the USD stock index slowed its fall:
On Thursday, the Fed established a temporary agreement with banks in many countries regarding the liquidity of US dollars. The banks include: the National Bank of Denmark, the Reserve Bank of Australia, banks in Mexico, Norway, New Zealand, Korea, Sveriges Riksbank (Sweden), and the Monetary Authority of Singapore. The agreement is to help ease the tension of the dollar financing in global markets, enabling lending to households and businesses both within countries and abroad.
60 billion US dollars will be provided to banks in Brazil, Australia, Korea, Mexico, the Monetary Authority of Singapore, and Switzerland, while 30 billion dollars will be given to Denmark, Norway, and New Zealand. These liquidity mechanisms will be in effect for six months.
The Federal Reserve will also constantly exchange dollar liquidity with banks in Canada, England, Japan, the European Central Bank and the Swiss National Bank.
