Reaction of American stock exchanges came soon after. Dow Jones index dropped in more than 2%, which is almost 500 points. “It may take some time until the economy recovers. And liquidity problems can eventually turn into solvency problems,” Jerome Powell added.
Hopes in quick recovery of the U.S. economy after coronavirus pandemic were hit by very uncertain economic outlook presented by Powell on Wednesday. He stated that some more government benefits to households could be effective and could protect local businesses from further deepening of their problems. “It would be expensive, but it could avoid long-term economic damage,” the Federal Reserve Chairman said. Furthermore, he reassured that the Fed does not plan to lower interest rates to negative values, even though some stock traders might expect that, according to him.