U.S. Federal Reserve Chairman Jerome Powell speaks during a House Financial Services Committee hearing in Washington, D.C., on Tuesday, February 11, 2020.
Andrew Herrer | Bloomberg | Getty Images
Federal Reserve Chairman Jerome Powell pledged continued support for the economy, saying it had improved significantly, but more work was needed.
In a remark the central bank leader will deliver to the House Financial Services Committee on Tuesday, he reiterated the Fed’s commitment to helping the economy through the coronavirus epidemic and outlined what has happened so far.
“We will use our resources as much as we can, as long as it takes, to ensure recovery is as strong as possible and to limit the permanent damage to the economy,” Powell said in his prepared testimony. Tuesday’s appearance is one of three Powell will perform on Capitol Hill this week.
The Fed has cut short-term interest rates to near zero and launched lending and liquidity programs that have helped ease market tensions and provide lending to businesses. In addition, the Federal Open Market Committee last week pledged not to raise interest rates until inflation is above 2%.
While Powell said favorable policies will continue as needed, he added that the economy has improved.
“Economic activity has rebounded from its disappointing second-quarter levels, while most economies were shut down to prevent the spread of the virus. Many economic indicators have shown significant improvement,” he said. “Both employment and overall economic activity remain well below their epidemic levels, and the way forward is very uncertain.”
The Fed’s support programs are expected to provide more than 2 2 trillion in funding at various levels, although only a small amount has been used.
The Main Street Lending Program, which focuses on small and medium-sized enterprises, has committed only 2 2 billion or more, despite the potential for 600 billion. A facility in which the Fed can buy corporate corporate bonds in the primary market has not been used.
Nevertheless, Powell said the overall facilities have released about half of their potential funding and the market will be ready for tensions to re-emerge.
“Our economy will recover from this difficult time,” he said. “We are committed to using our full resources as long as necessary to support the economy.”
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