Fed Chairman Powell Renews Call for Stimulus Bill

WASHINGTON, DC - SEPTEMBER 23: Federal Reserve Chair Jerome Powell testifies before the Select Subcommittee on the Coronavirus Crisis on the Federal Reserves response to the coronavirus pandemic, on Capitol Hill on September 23, 2020 in Washington, DC. (Photo by Kevin Dietsch -Pool/Getty Images)

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In his latest call for more government relief for struggling U.S. households, Federal Reserve Board Chairman Jerome Powell said Thursday that financial assistance provided through the CARES Act was “absolutely essential” to the economic recovery and the country likely needs more as the impact of the pandemic persists. 

“Fiscal policy can do what we can’t, which is to replace lost incomes for people who are out of work through no fault of their own,” Powell said at a press conference after the latest meeting of the Federal Reserve’s Federal Open Market Committee. “All of us lived through the experience of the years after the global financial crisis. For a number of years there in the middle of the recovery, fiscal policy was pretty tight, and I think we will have a stronger recovery if we can just get some fiscal support.”

The U.S. economy has regained just over half of the roughly 22 million jobs lost in March and April, when large sectors of business were shut down to curb the spread of COVID-19. But cases of the COVID-19 virus are surging, and Powell noted that business sectors like travel and hospitality aren’t rebounding like others because they require people to gather in close quarters. 

Democratic and Republican lawmakers and leaders have been unable to reach an agreement on a follow-up to the CARES Act, which provided one-time $1,200 stimulus checks to most Americans and an extra $600 a week in unemployment benefits to those who had lost their jobs through July.

But the spirit of negotiations may change now that voting in the presidential election has concluded, Republican Senate Majority Leader Mitch McConnell said Wednesday at a news conference, calling for another rescue package to be passed before the end of the year. The Senate reconvenes Monday.

“Hopefully the partisan passions that prevented us from doing another rescue package will subside with the election,” McConnell said.

The FOMC and Powell didn’t announce any major policy changes Thursday, restating the Fed’s commitment to keeping the target for the benchmark fed funds rate at virtually 0% until the labor market is restored and a 2% inflation rate is achieved (probably until at least 2023, according to the committee’s most recent projections). He also said the Fed would continue buying securities to bolster credit markets.