Fed Official Counters Criticism Against Recent Stimulus Measures
San Francisco Fed President Mary Daly defended the US central bank’s massive stimulus efforts in the wake of the coronavirus crisis after they came under criticism for offering more support to the rich instead of helping the poor people who were affected by the economic fallout from the pandemic. Since the pandemic hit the US in March, the Fed has cut interest rates down close to zero, unveiled trillions of dollars worth of bond purchases, and announced measures to backstop and extend corporate credit and boost bank lending.
In a recent interview with CNN, Daly remarked, “There really isn’t this bright line that separates Main Street from Wall Street. If we don’t repair the financial markets and ensure they have liquidity, they can’t pass along the interest rate changes to households and businesses that need them the most…our support for the economy supports everyone.”
The Fed’s stimulus measures have been criticised by some who allege that they have helped the rich in the country by boosting prices of assets like stocks even as more and more people lose their jobs in the wake of the uncertainty. However, Daly clarified that the Fed’s moves have instead helped save jobs by providing access to financing for businesses so that they can maintain their levels of operations.
The Fed has also come under fire over economic inequality against the backdrop of racism following the recent protests in the country against the death of George Floyd. To this, Daly responded by saying that the fight against racism was not just a moral issue but also has economic implications as bringing more people into the labour market helps aid overall growth in the economy.
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