"A full recovery is unlikely until people are confident that it is safe to re-engage in a broad range of activities," Powell says in testimony he is scheduled to deliver on Tuesday in an appearance with Treasury Secretary Steven Mnuchin before the House Financial Services Committee.
The recession is hurting Americans unequally, taking the deepest toll on African Americans and other minorities, Powell said in prepared remarks for his testimony before the US House of Representatives Financial Services Committee.
Encouraging economic data and trillions of dollars in monetary and fiscal stimulus have propelled a rally in the Wall Street indexes from their late-March trough.
Powell is delivering the first of two days of semi-annual congressional testimony, on Tuesday to the Senate Banking Committee before addressing the House Financial Services Committee on Wednesday.
In its twice-annual Monetary Policy Report to US lawmakers, the Fed also reinforced expectations for a sharp decline in economic activity in the current quarter.
The Fed has cut its benchmark short-term rate to near zero. Keeping its rate ultra-low for more than two more years could make it easier for consumers and businesses to borrow and spend enough to sustain an economy depressed by business shutdowns and high unemployment.
The Fed has gone all out to steady financial markets since March, lowering borrowing costs and creating credit backstops for companies and local governments reeling from the economic fallout of lockdowns to stop the spread of the novel coronavirus.
It’s impossible to guess what the trajectory for the economy will look like, a series of central bankers warned. That makes nimbleness key
Powell and Mnuchin were testifying to the Senate Banking Committee as Congress considers whether to roll out trillions of dollars of additional aid to bolster an economy that was brought to a virtual standstill by lockdowns imposed in March and April.
"If we are thoughtful and careful about how we reopen the economy so that people take these social distancing measures forward and try to do what we can not to have another outbreak...then the recovery can begin fairly soon," Powell said.
Jerome H Powell, who heads the central bank, predicted a slow economic recovery and reiterated that policymakers may need to do more
He suggested that a full recovery won't likely be possible before the arrival of a vaccine.
Given the choice between leaving the economy without a lifeline and making that debt load even bigger, Federal Reserve Chair Jerome Powell on Wednesday sent a not-so-subtle message to U.S. elected officials: Spend whatever you need in this crisis.
It will take some time for the U.S. economy to get back to where it was, Powell said in a webcast, and called for more fiscal stimulus.
In a Webcast Question & Answer hosted by the Peterson Institute for International Economics, Powell said the Fed's view on negative interest rates has not changed and it is not something the policy-setting committee is looking at.
The Dow Jones Industrial Average fell 62.62 points, or 0.26 percent, to 23,702.16 at the open.
Powell says the Fed will “continue to use our tools to their fullest” until the viral outbreak subsides but gives no hint of what the Fed's next steps might be.
Gold held steady on Wednesday as market participants stayed away from making big bets ahead of a speech by Federal Reserve Chairman Jerome Powell amid rising speculation the United States could one day adopt negative interest rates.
With so much uncertainty around the economic outlook, the Fed said it expects to maintain the target range for its benchmark overnight lending rate "until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals."
The economy contracted in the first quarter at its sharpest pace since the Great Recession, ending the longest economic expansion in the nation's history, the Commerce Department reported on Wednesday.
For better or worse, Powell will probably be one of the most consequential central bankers in US history, as he deploys trillions of dollars in unprecedented ways. The question for the economy is whether his long and winding career path will enable him to get it right
The Fed's March 15 move is its second emergency rate cut in less than two weeks
That assessment would echo the formal report the Fed submitted to the U.S. Congress on Friday, which repeated the central bank's view that its current target range for short-term borrowing costs, between 1.5% and 1.75%, is "appropriate" to keep the expansion on track.
"The Fed acknowledged the new risk (coronavirus) that has come to the market scenario, and said it didn't see 2% as a ceiling for inflation. In other words, it could continue cutting rates even if inflation remained higher," said Michael McCarthy, chief market strategist at CMC Markets.
"The public has every right to expect and will expect that we will ensure that the financial system is resilient and robust against the risks of climate change," Powell said at a news conference following the Fed's January meeting.