Federal Reserve Chairman Jerome Powell says the federal government’s role in strengthening the U.S. market in the face of a recession is vital in preventing a worsening of economic inequality.
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Powell told a House panel the Fed would continue to deploy all its financial tools to help “get back as quickly as we can to a tight labor market.”
And he reiterated his belief that Congress must avoid withdrawing its own rescue efforts too quickly or else the most disadvantaged households would disproportionately suffer.
The chairman’s remarks to a House committee came on the second day of his semi-annual testimony to Congress on monetary policy. As he had on Tuesday to the Senate Banking Committee, Powell stressed that the Fed would keep its benchmark interest rate, which influences many business and household loans, at a record low near zero and make full use of the numerous lending programs it has unveiled since the coronavirus struck.
Democrats pressed Powell to endorse a widening of the congressional support, including lengthening the period for enhanced unemployment benefits and providing more support for state and local governments.
Powell did not endorse specific proposals. But he said Congress should avoid a mistake it made during the last recession of pulling back on support too quickly and should provide targeted help to groups that have been hurt the most in the downturn.
“I do think it would be appropriate to think about continuing support for people who are newly out of work and for smaller businesses who are struggling,” Powell said.
“The economy is just now beginning to recover. It’s a critical phase, and I think that support would be well-placed at this time.”