Federal Reserve Chairman Jerome Powell compared the actions taken by the central bank early in the pandemic as the economy barrelled toward a recession to British efforts in World War II to evacuate troops at Dunkirk.
Asked Thursday in an NPR interview whether he would have anything different back in March 2020 if given the chance, Powell said, “We almost certainly didn’t do everything right but we knew at the very beginning that we should use all of our tools and use them as aggressively and extensively as we needed to.”
The Fed slashed its key benchmark lending rate to a record low of 0% to 0.25%, created a number of emergency lending programs to shore up a financial system in crisis and began buying billions of dollars in bonds to keep long-term interest rates low.
“We knew that we would never be able to explain in such an emergency situation why we hadn’t used our tools in that way,” Powell said. “So we did.”
In that environment, with the U.S. economy facing peril on multiple fronts, Powell compared the urgency with which the Fed acted to the way the British deployed an impromptu regatta to evacuate thousands of its troops from Dunkirk in France that were surrounded by German forces.
“It was time to get in the boats and protect the people, not check the inspection records,” Powell said. “Just get in the boats and go. And that’s what we did.”
Powell said there may have been things the Fed could have done differently, or not done at all in hindsight, but that overall the effort was a success.
“It served its purpose in staving off what could have been far worse outcomes,” Powell said. He credited Congress with quickly passing the CARES Act in the first step of what eventually became more than $4 trillion in government support to prevent the economy from sliding into a deeper recession.