2/12, 4:35 PM (Source: TeleTrader)
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Powell: Likely to need QE in a downturn

Federal Reserve Chairman Jerome Powell came back to Capitol Hill on Wednesday for the second day of testimony on the economy and monetary policy regulation. He stated that the United States will probably need quantitative easing as well as "forward guidance which says we’ll keep rates low – we will use those tools aggressively" in case of a downturn.

Speaking before the Senate Banking Committee, Powell said he is "concerned already now. We have to have debt growing slower than the economy. Twenty years from now we’ll be sending those tax dollars for servicing the debt. Debt doesn’t go down if the economy goes downturns. Quite the opposite."

Yesterday Powell stressed that he expects the central bank to continue repo operations and purchases of treasury bills in the second quarter of this year. He added that the appropriate levels of reserves are expected to pile up by the middle of the year.

Breaking the News / TF