In an interview with CNBC, Minneapolis Federal Reserve President Neel Kashkari said the Fed still has monetary policy options to combat COVID-19, but noted negative interest rates are not among them.
Kashkari called on Congress to act in situations, such as a potential bailout for the airline industry but noted the Fed is in the “fourth round” of responders to the crisis, behind health care professionals, the public, and Congress.
“We are not at the front line of this,” he said on “Squawk Box.” “But we do have a job to do and we are using our tools aggressively to try to make sure the financial system is ultimately working.”
He also rejected criticism during the interview from some quarters that the Fed should have waited to use its final ammunition on the interest rate front. He compared the predicament to a driver coming up on a hill who accelerates before rather than waiting.
“The notion that we should save our cuts for later is a colorful metaphor, but it’s just flat-out wrong,” he said.
The Federal Reserve cut interest rates to zero on Sunday in an effort to bolster the U.S. economy as it combats the effects of the coronavirus.
The benchmark interest rate is now in a range of 0% to 0.25%, which is down from a range of 1% to 1.25%. The Fed also announced it is re-starting its "quantitative easing," as it did following the Great Recession to try and get money into the markets and the economy.
The Fed also announced that over the coming months that it will increase its holdings of Treasury securities by at least $500 billion and its holdings and agency mortgage-backed securities by at least $200 billion.
Chair of the House Financial Services Committee Maxine Waters, however, is not in favor of the Fed’s recent actions.
“The global spread of the novel coronavirus has adversely impacted the lives of millions of Americans, the economy and the financial system,” she said. “This is in many ways an unprecedented crisis which calls for extraordinary federal response. Unfortunately, the Fed appears to be using its old playbook in trying to calm funding markets by flooding them with liquidity.”
Waters said it is critical that the Fed to “go beyond these steps” to provide support to those on the front lines of COVID-19.
Additional relief for all could be on the way, as Treasury Secretary Steve Mnuchin said the government is "looking at sending checks to Americans immediately," during Tuesday’s White House Coronavirus Task Force briefing Tuesday.
Mnuchin added the goal would be to send checks to Americans in two weeks to help workers cope with the economic effects of COVID-19. Republican Senators Tom Cotton and Mitt Romney, as well as Democratic Sen. Tulsi Gabbard, have suggested $1,000 per adult.