New York Fed’s Williams says full economic consequences of coronavirus still unknown

People walk wearing masks outside The Federal Reserve Bank of New York in New York
FILE PHOTO: People walk wearing masks outside The Federal Reserve Bank of New York in New York City, U.S., March 18, 2020. (REUTERS/Lucas Jackson)


The Federal Reserve took “bold action” to shore up markets disrupted by the coronavirus pandemic and launched an unprecedented level of open market operations, but the full scale of the virus’ toll on the economy is still unknown, New York Federal Reserve Bank President John Williams said Thursday.

The Fed joined central banks around the world in efforts to bolster the global economy as the spread of the virus led to widespread closures of restaurants, museums and other businesses.

Investors at the same time fled to safer assets, creating market volatility and spurring the Fed into action to keep cash flowing through key credit markets, Williams said in his first public remarks since mid-March, when the central bank slashed rates to zero and launched open-ended purchases of Treasury securities, mortgage-backed securities and other assets.

“The coronavirus pandemic has created circumstances we have never experienced before in our lifetimes,” Williams said in remarks prepared for a webinar organized by the Economic Club of New York. “The reality is that the full scale of the economic consequences is still unknown.”

Fed officials moved rapidly to stem the economic damage caused by the coronavirus pandemic by cutting rates and launching a series of emergency lending tools meant to support money markets, corporate bonds, mortgage bonds and other markets. The New York Fed is tasked with executing most of those facilities.

“To put the current situation in context, we are running more open market operations, for greater sums, than at any time in our history,” Williams said.

Lorie Logan, the manager of the System Open Market Account, said earlier this week that the Fed’s actions helped to ease trading conditions in some markets. However, she said it may be a while before markets return to pre-crisis levels.

Williams also said Thursday that the uncertainty is not over. “Our work is not done,” he said.