Fed Powell Emphasizes Uncertainty and Challenges Facing the US Economy

(Reuters) – US Federal Reserve Chairman Jerome Powell said Monday that prospects for the world’s largest economy are “extraordinarily uncertain” and will depend as much on containing the coronavirus as on government efforts to support the recuperation.

Economic activity has accelerated in recent weeks after what had been months of closings in some places to curb the spread of the new coronavirus, Powell said in remarks prepared for a hearing in Congress on Tuesday.

“We have entered an important new phase and we have done it earlier than expected,” Powell said. “While this rebound in economic activity is welcome, it also presents new challenges, notably the need to keep the virus under control.”

With production and employment still well below pre-crisis levels, he said, “the way forward for the economy is extraordinarily uncertain and will largely depend on our success in containing the virus,” again saying that it is little. A full recovery is likely even people trust that it is safe to be away from home.

“The way forward will also depend on political actions taken at all levels of government to provide aid and support recovery for as long as it takes,” Powell said.

The Fed cut rates to near zero, bought trillions of dollars in bonds, and launched nearly a dozen credit-backed programs to boost the economy and keep markets stable. The Fed is also committed to using the “full range of tools” to support the United States economy.

Congress has committed nearly $ 3 billion in aid.

But perhaps more is needed, Powell said, noting that the central bank’s still-untapped credit line from the central bank may prove valuable “in the coming months” for companies affected by a dramatic drop in economic activity during the pandemic.

Some states have begun delaying their reopening as coronavirus infections increase.