Powell Compares Fed Actions to Dunkirk: ‘Just Get in the Boats and Go’

Federal Reserve Chairman Jerome Powell said that he hopes history will be kind to the central bank for the actions it took in the midst of the COVID-19 pandemic last year.

“I liken it to Dunkirk, when it was time to get in the boats and get the people — not to check the inspection records and things like that. Just get in the boats and go, and that’s what we did. I think overall it was a very successful program,” Powell told NPR’s Morning Edition on Thursday, referring to England’s military campaign to withdraw troops from France during World War II.

As the coronavirus began gripping the U.S. economy in the spring of 2020, the Fed slashed interest rates to zero, restarted its financial crisis-era policy of large-scale asset purchases, and unveiled a suite of liquidity facilities designed to support the flow of credit in several markets.

“In a crisis, what we did served its purpose in staving off what could have been far worse outcomes,” Powell said, adding that the economy was also buoyed by swift congressional action on the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

Powell said the economic outlook is improving, primarily because of the progress on the vaccine rollout. The Fed chief said a fresh round of fiscal stimulus from Congress will support hiring and broad economic activity as the economy continues to reopen.

But Powell clarified that the Fed is not going to immediately pull its monetary stimulus in the face of that optimism, adding that any rate hikes or reduction in the pace of asset purchases will happen “very gradually over time, and with great transparency.”

As the government has spent trillions of dollars across three separate coronavirus relief bills, the Fed has expanded its balance sheet by over $3 trillion as it pumped money into the economy.

Although Powell said that the pace of U.S. debt accumulation was “unsustainable,” the Fed chair said the government should have “no issue” being able to service its debt now or in the foreseeable future. He added that until the economy is back to full employment and taxes are rolling back in, the government can address the national debt.

“We will need to do that, but that time is not now,” Powell said.

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