Washington — The coronavirus pandemic inflicted a “cruel and uneven toll on lives and livelihoods” across the United States, head of the Federal Reserve Jerome Powell (pictured) told the Wall Street Journal on Friday. The official stated that the central bank and the government acted together to limit the long-term effects of the “unprecedented” downturn, with more than half of the initial job losses being recovered. The arrival of COVID-19 vaccines has also helped “brighten” the economic outlook, he added.
“But the recovery is far from complete, so at the Fed we will continue to provide the economy with the support that it needs for as long as it takes,” Powell concluded.
“The economic recovery remains uneven and far from complete, and the path ahead is highly uncertain,” Powell said in written testimony to the Senate Banking Committee. Powell’s comments are in contrast to the increasing optimism among many analysts that the economy will grow rapidly later this year. That outlook has also raised concerns about a potential surge in inflation and fueled a sharp increase in longer-term interest rates this year. Many economists say they think the Fed’s continued low rates, further government financial aid and progress in combating the viral pandemic could create a mini-economic boom as soon as this summer. “Mr. Powell presumably wants to try to persuade markets that a strengthening economy does not necessarily mean that rates have to rise,” Ian Shepherdson, chief economist with Pantheon Macroeconomics, told investors in a note. “Good luck with that when the post-Covid surge in activity become clear.” Financial markets fell modestly in morning trade, with the S&P 500 and Dow stock indexes both down less than 1% and the tech-heavy Nasdaq down 242 points, or 1.8%.Powell acknowledged the potential for a healthier economy. But he stressed the challenges caused by the pandemic, especially for unemployed Americans.