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Powell says Fed has America's back with Congress arguing aid
[WASHINGTON] Federal Reserve Chairman Jerome Powell said the central bank is ready to use all the weapons in its arsenal to help the US economy endure the coronavirus pandemic, as attention shifts to whether Republicans and Democrats will agree to more fiscal aid.
"We are committed to using our full range of tools to support the economy in this challenging time even as we recognize that these actions are only a part of a broader public-sector response," Mr Powell said Tuesday in remarks to the Senate Banking Committee.
Mr Powell appeared before lawmakers for a virtual hearing with US Treasury Secretary Steven Mnuchin on the first quarterly Coronavirus Aid, Relief, and Economic Security (CARES) Act report to Congress. Lawmakers are expected to push the Fed chief to spell out if he thinks more fiscal support is necessary and what form it should take.
Republicans and Democrats are arguing over the scale and timing of additional fiscal stimulus after Congress passed around a record US$3 trillion in support to aid the economy during the pandemic, which has cast millions out of work as businesses shuttered and Americans stayed home to limit contagion.
Working with the Treasury, the central bank has launched unprecedented support for markets and the economy since mid-March. It slashed interest rates to near zero and unveiled nine emergency lending programs, supporting everything from corporate to municipal credit markets as it tried to stabilize access to financing.
The Fed is still trying to launch four of the nine facilities, including one aimed at Main Street that will buy bank loans extended to mid-size businesses. The facility is one of the riskiest and most challenging programms the Fed has undertaken given the diversity of businesses that are likely to borrow.
"We expect all of them to be stood up and ready to go by the end of this month," Mr Powell said of the remaining programs during questioning at the hearing. "People are working literally around the clock and have been for weeks."
The House backed an additional US$3 trillion Democratic economic stimulus bill Friday that Republicans and President Donald Trump have already rejected.
The measure would give cash-strapped states and local governments more than US$1 trillion while providing most Americans with a new round of $1,200 payouts. House Speaker Nancy Pelosi said it should be the basis of talks with the GOP-controlled Senate and White House, which have called for a pause to allow earlier virus-recovery spending to work.
Mr Powell, a Republican whom Trump nominated to the top Fed job, has already said he thinks governments should do more, and has said the Fed is willing to go further if needed to support the economy.
"We're not out of ammunition by a long shot," the Fed chairman told CBS's "60 Minutes" show in an interview aired Sunday. "We can enlarge our existing lending programs. We can start new lending programs if need be."
Mr Powell said the scope and speed of the downturn "are without modern precedent and are significantly worse than any recession since World War II."