(Reuters) - Chicago Federal Reserve Bank President Charles Evans said Friday he was disappointed by U.S. Treasury Secretary Steven Mnuchin’s decision Thursday to end several of the Fed’s key pandemic lending programs on Dec. 31.
“I think that backstop role may be quite important for quite some time so it’s disappointing,” Evans said in an interview on CNBC. “The virus spread is increasing and so there are risks from that... it would be good to have more support coming from all directions.”
Mnuchin told Fed Chair Jerome Powell in a letter Thursday that the $455 billion allocated to Treasury under the CARES Act last spring, much of it set aside to support Fed lending to businesses, nonprofits and local governments, should be instead available for Congress to reallocate. The Fed’s facilities, he said, “have clearly achieved their objective.”
The Fed disagrees, and made that clear in a statement shortly after Mnuchin made his letter public. Evans on Thursday said he expects discussions to continue between the Fed Chair and the Treasury.
On the Fed’s bond-buying, Evans said the Fed’s $120 billion monthly purchases are delivering “a tremendous amount” of support to the economy. The program could be enhanced if needed, he said, by extending the maturity of purchases or even buying more, but he signaled, as he has before, that he would be looking to springtime to have a better notion of what the economy would need.
“We are in a pretty good place at the moment to see how everything is going to play out,” he said, as far as fiscal support, the transition, and the public health. “We obviously could do more with enhanced asset purchasing.”
Reporting by Ann Saphir; Editing by Chizu Nomiyama
Our Standards: The Thomson Reuters Trust Principles.