Federal Reserve Chairman Jerome Powell pledged continued support for an economy that he said has shown substantial improvement but still needs more work.
In remarks the central bank leader will deliver Tuesday to the House Financial Services Committee, he reiterated the Fed’s commitment to helping the economy through the coronavirus pandemic and outlined what’s been done so far.
“We remain committed to using our tools to do what we can, for as long as it takes, to ensure that the recovery will be as strong as possible, and to limit lasting damage to the economy,” Powell said in his prepared testimony. The appearance Tuesday is one of three Powell will make on Capitol Hill this week.
The Fed has cut short-term interest rates to near zero and launched 13 lending and liquidity programs that have helped ease market stresses and provided credit to businesses. In addition, the Federal Open Market Committee last week committed to not raising interest rates until inflation rises above 2%.
While Powell said the accommodative policies will continue as needed, he added that the economy has improved.
“Economic activity has picked up from its depressed second-quarter level, when much of the economy was shut down to stem the spread of the virus. Many economic indicators show marked improvement,” he said. “Both employment and overall economic activity, however, remain well below their pre-pandemic levels, and the path ahead continues to be highly uncertain.”
The Fed’s support programs have the potential to provide more than $2 trillion in various levels of funding, though same have been used only lightly.
The Main Street Lending Program, geared towards small- and medium-sized businesses, has just $2 billion or so committed though it has the potential for $600 billion. A facility in which the Fed can purchase corporate bonds on the primary market hasn’t been used at all.
Still, Powell said the facilities overall have unleashed about half their potential funding and will be at the ready should market stresses re-emerge.
“Our economy will recover fully from this difficult period,” he said. “We remain committed to using our full range of tools to support the economy for as long as is needed.”