Fed chairman calls economic recovery ‘extraordinarily uncertain’



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“As we have emphasized throughout the pandemic, the outlook for the economy is extraordinarily uncertain and will depend, in large part, on the success of efforts to bring the virus under control.” Powell said in remarks prepared for his testimony Tuesday before the US Senate Committee on Banking, Housing and Urban Affairs. “The increase in the number of new cases of Covid-19, here and abroad, is worrying and could prove difficult for the coming months. A full economic recovery is unlikely until people are convinced that it is safe to re-engage in a wide range of activities. ”
Powell’s remarks echo comments he made earlier this month. In a virtual roundtable at the European Central Bank’s Forum on Central Banks, Powell highlighted the recovery in the economy, but noted that the economy we knew before the coronavirus pandemic may be over.

But recent news of promising vaccines has Powell “very positive” for the medium term, although he expects “significant challenges and uncertainties, including timing, production and distribution, and efficacy in the future. the different groups. ”

“It remains difficult to assess the timing and extent of the economic implications of these developments with any degree of confidence,” he said.

Meanwhile, several programs used by the Fed in March are expected to expire at the end of the year. Powell said the programs are helping “unlock nearly $ 2 trillion in funding.”

“These programs serve as a backstop to major credit markets and have helped restore the flow of credit from private lenders through normal channels. We have deployed these lending powers to an unprecedented degree,” Powell said in his remarks.

Treasury Secretary Steve Mnuchin, who will testify alongside Powell this week, said in a Nov. 19 letter that he was granting a 90-day extension to four of these programs “with great caution.” However, Mnuchin did not grant extensions for five other loan programs that include the Corporate Debt Purchase Program and the Main Street Loan Program.
Powell reiterated the Fed’s stance on using its policies to help ease the economic burden that emerged from the pandemic, which included keeping interest rates at zero and buying assets at the current rate of 80 billion dollars in treasury securities and $ 40 billion in agency mortgage-backed securities per month.

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