US Federal Reserve Chair Jerome Powell said Tuesday the path to recovery for the American economy “continues to be highly uncertain,” but the central bank is committed to use all tools to ensure recovery.
The Fed will use all tools to limit any lasting damage to the economy because of COVID-19 and ensure a strong recovery, Powell said during testimony before the House of Representatives Committee on Financial Services.
Much of the American economy was shut down due to the novel coronavirus, but since then many indicators have showed improvement and economic activity has picked up from its depressed second-quarter level, he noted.
The world’s largest economy contracted a record 31.7% in the April-June period, but added 1.4 million jobs in August with unemployment rate falling to 8.4%.
“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,” he said.
“A full recovery is likely to come only when people are confident that it is safe to reengage in a broad range of activities. The path forward will depend on keeping the virus under control, and on policy actions taken at all levels of government,” he added.
Powell emphasized that state and local governments helped unlock more than $1 trillion in funding to support businesses, while $2 trillion in loans were funded or pumped into the system.
The central bank’s programs have significantly increased the extension of credit from private lenders, Powell said. “These are lending, not spending powers, he said. In these cases, direct fiscal support may be needed,” he added.
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