Federal Reserve Chair Jerome Powell stressed the importance of keeping the coronavirus contagion contained as the U.S. economy bounces back from its deepest contraction in decades.
“We have entered an important new phase and have done so sooner than expected,” Powell said in remarks prepared for testimony before the House Financial Services Committee on Tuesday with US Treasury Secretary Steven Mnuchin. “While this bounceback in economic activity is welcome, it also presents new challenges—notably, the need to keep the virus in check.”
The Fed released the text of his remarks on Monday afternoon.
The Fed and Treasury have worked together to launch nine emergency lending programs aimed at providing backstop credit to everything from municipalities to medium-sized businesses. Those actions helped lower borrowing costs and keep the financial system liquid in a time of stress.
The Fed chair struck an optimistic note on what he is seeing as economic activity resumes. Hiring is picking up, he noted, and spending is increasing, though 20 million Americans have lost their jobs.
“The path forward for the economy is extraordinarily uncertain and will depend in large part on our success in containing the virus,” he said. “A full recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities.”
As he has in recent appearances, Powell also warned against pulling back on any form of stimulus too soon.
“The path forward will also depend on the policy actions taken at all levels of government to provide relief and to support the recovery for as long as needed,” he said.