0606 GMT October 24, 2020
Fed’s Powell says US economy faces long, uncertain recovery
Federal Reserve Chair Jerome Powell said the US economy is improving but has a long way to go before fully recovering from the coronavirus pandemic.
“Many economic indicators show marked improvement,” Powell said Monday in the text of testimony he’s scheduled to deliver before the House Financial Services Committee on Tuesday, Bloomberg reported.
“Both employment and overall economic activity, however, remain well below their pre-pandemic levels, and the path ahead continues to be highly uncertain,” he said.
Powell will appear alongside Treasury Secretary Steven Mnuchin, a quarterly exercise mandated by the Cares Act passed by Congress in March and which appropriated about $2 trillion to help speed the US recovery. The pair are likely to face questions about their use of Cares Act funds and about what else should still be done.
In his testimony, Powell repeated earlier remarks that more is required from both fiscal and monetary policy to prevent the pandemic from causing long-term damage to the economy.
“The path forward will depend on keeping the virus under control, and on policy actions taken at all levels of government,” he said.
Powell appeared to anticipate questions about the Fed’s troubled Main Street Lending Program, a $600 billion facility aimed at providing credit to small- and mid-sized companies. He said Fed officials had responded to feedback by making adjustments to the program.
Still, he added, “Main Street loans may not be the right solution for some businesses, in part because the Cares Act states clearly that these loans cannot be forgiven.”
The Fed has come under criticism for the low take-up so far from the Main Street program. It has so far purchased just $1.5 billion in loans, as of Sept. 16. Some banks, especially larger institutions, have balked at lending through the program to the riskier businesses that may need them the most.