Powell to Reiterates Fed's Stimulus Support Amid Uncertain Outlook in Testimony


© Reuters.

By Yasin Ebrahim

Investing.com – Federal Reserve Chairman Jerome Powell is expected to acknowledge that economic activity has improved, but reiterate the Federal Reserve’s committed to maintain loose monetary policy measures as the outlook remains uncertain,. according to prepared remarks of his Congressional testimony slated for Tuesday.   

“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,” Powell is expected to tell the Committee on Financial Services in the U.S. House of Representatives.

“Since mid-March, we have taken forceful action, implementing a policy of near-zero rates, increasing asset holdings, and standing up 13 emergency lending facilities.”

Powell will also acknowledge the rebound in the economy since the pandemic struck in March, but continue to suggest the Fed “remains committed to using our full range of tools to support the economy for as long as is needed.’

“In the labor market, roughly half of the 22 million payroll jobs that were lost in March and April have been regained as people return to work. 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 chief will continue to call on Congress to roll out fiscal support to maintain the current pace of the recovery. 

Many borrowers will benefit from [the Fed’s] programs, as will the overall economy, but for others, a loan that could be difficult to repay might not be the answer. In these cases, direct fiscal support may be needed,” prepared remarks from Powell’s testimony said.

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