The Role Of The Federal Reserve (Fed) In Covid-19

The role of covid-19 in the economic crisis: the new mandate of the us central bank?

In the past few decades, especially after Speaker Paul Volcker(1979-1987), the extension of admission has proved that he can act quickly and effectively in various crises. Recently, especially in the face of a very serious financial crisis in 2007-2011, and in today’s global economic collapse caused by the covid-19 virus, its role is being redefined.

In fact, the opposite is true. The theory of free market economy: especially during the Great Depression from 1929 to 1939, Adam Smith and his non intervention policy may provide a seemingly “non intervention” policy recently; financing and economic stability are not only lenders, especially as “banks” Messiah “; the last resort. Therefore, considering that the huge impact of covid-19 has led to the current economic crisis, the impact of inflation in the United States should be mitigated through the gradual action taken by the Federal Republic of the United States under its mandate. “We believe that inflation in the United States is a very serious problem.” “Maximum employment, stable prices, and moderate long-term interest rates”;(Federal Reserve System, 1977).

While J é r è me Powell continued to reiterate his commitment to the implementation of the license extension, the actual speaker of the extension also made contributions to changing the way of communication with financial market operators and economic forces, which is more different from the transfer behavior of the central bank. In fact, following the measures taken by Ben Bernanke during the crisis in 2007(extended from 2006 to 2014), President Powell, as the president of the Central Bank, did not act and communicate, but only focused on sanctions against any excess behavior. He said, “Work and exchange”; we will work very openly and actively with these capabilities to provide a comprehensive and predictable roadmap of measures and crisis solutions.

At present, the bond market does not predict the upcoming inflation surge. The yield of 10-year treasury bonds fell to the lowest level in history from 1.70% at the beginning of March 2021 to 1.16% on July 20. No matter what is needed, “; after the extreme global” crisis “, the strong demand for goods and services is suppressed, so the current method and reality of high inflation reporting; economic repression; in 2020, Ranzhun is working hard to cope with the most realistic situation of rapid “stagnation”. “V”; economic recovery. However, the relatively high inflation rate(above 5%) should be temporary. Once the abnormal growth of economic demand falls back reasonably in the next 12 months, the Federal Reserve can continue, about 2% of the normal level(before the outbreak of infectious diseases) You can go down. According to the annual change of the price index of personal consumption expenditure, in the long run, the inflation rate of 2% is the most consistent with the requirements of the Federal Republic of the United States. “)

Finally, inflation volatility is high in the short term, but the trend strategy is “;” Don’t quarrel with the FBI “; more effective than ever. Specifically, Lian Zhun’s efforts;” Today, the new task of supporting the economy is being further promoted in a transparent and specific way. Since then, it has provided a comprehensive way for the entire economic force, and undoubtedly also a way for financial market institutions.