US: Fed to increase asset purchases if recovery slows

By Ovunc Kutlu

ANKARA (AA) - The US Federal Reserve will increase its asset purchases if the economic recovery starts to slow down, its chairman said.

If there are signs of a slowdown in recovery of the world's largest economy, the Fed would increase its balance sheet expansion and overall monetary policy, Jerome Powell said late Wednesday in an hour-long press conference after the bank kept its interest rate unchanged.

"Overall, our interest rate and balance sheet tools are providing a powerful support for the economy and will continue to do so," he said, as the bank will continue purchasing assets from the open market to increase liquidity in order to support economy.

As a result, the Fed would buy at least $80 billion US Treasury bonds and $40 billion of mortgage-backed securities every month until "substantial forward progress" is made toward maximum employment.

Powell reiterated the central bank's support of using all of its monetary tools until US economy fully recovers from the slowdown caused by COVID-19.

While the Fed Chair has repeatedly in recent months called on the Congress to offer a fiscal stimulus, he welcomed the lawmakers' latest efforts to pass a $908 billion relief bill.

US House of Representatives Speaker Nancy Pelosi, Senate Minority Leader Chuck Schumer and Treasury Secretary Steven Mnuchin spoke Wednesday night over the phone to complete the relief bill negotiations, Drew Hammill, Pelosi's spokesman said on Twitter.

"All three emphasized the urgency to reaching an immediate agreement and will exchange additional paper and resume conversations in the morning," Hammill added.