Powell: More Fiscal Support May Be Needed to Address Economic Effects of Coronavirus

Policymakers “ought to do what we can” to avoid a prolonged period of recession as a result of the coronavirus pandemic, Federal Reserve Chairman Jerome Powell said in remarks at a virtual event today. He noted that avoiding these outcomes “may require additional policy measures” beyond the $2.9 trillion in fiscal support already authorized by Congress and the number of actions the Fed has already taken to mitigate the economic fallout of the crisis.

“The record shows that deeper and longer recessions can leave behind lasting damage to the productive capacity of the economy,” Powell warned. “Additional fiscal support could be costly, but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery. This tradeoff is one for our elected representatives, who wield powers of taxation and spending.” He added that the Fed will continue to use its tools “to their fullest until this crisis has passed and the economic recovery is well under way.”