WASHINGTON — Federal Reserve Chairman Jerome Powell says that the pace of improvement in the economy has moderated in recent months with future prospects remaining "extraordinarily uncertain."
In remarks released by the Fed on Monday, Powell said that the increase in new COVID-19 cases both in the United States and abroad was "concerning and could prove challenging for the next few months. A full economic recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities."
Powell said while progress on developing vaccines had been "very positive," significant challenges remained regarding the timing, production and distribution of the vaccines, and it remained difficult to assess the economic implications of this process with any degree of confidence.
Powell's remarks were prepared for a joint appearance he will make on Tuesday with Treasury Secretary Steven Mnuchin before the Senate Banking Committee. The hearing is part of the panel's oversight responsibilities required under the $2 trillion CARES Act legilsation Congress passed in March.
In Mnuchin's prepared remarks, which were also released Monday, the Treasury secretary said the Trump administration was still willing to support targeted fiscal package to provide further economic relief.
"I strongly encourage Congress to use the $455 billion in unused funds from the CARES Act to pass an additional bill with bipartisan support," Mnuchin said. "The administration is standing ready to support Congress in this effort to help American workers and small businesses that continue to struggle with the impact of COVID-19."
Mnuchin announced on Nov. 19 that he would not grant extensions for five lending programs being operated jointly by the Fed and the Treasury Department that were scheduled to expire on Dec. 31. Mnuchin said that the money allocated to the Fed for those programs should be used now instead to provide support to Congress for additional assistance to individuals and businesses.
The five programs that Mnuchin announced he would not extend past this year included backstops for corporate and municipal debt and the purchase of loans for small businesses and nonprofits.
Earlier on Monday, the Fed and Treasury announced as expected that four other lending facilities that do not utilize CARES Act funds would be extended through next March. Those facilities helped to stabilize short-term funding markets when the coronavirus hit last spring, sending shockwaves through the financial system.
The four Fed loan programs that were extended included the Commercial Paper Funding Facility, which provided critical support for the market that supplies short-term corporate IOUs. Also extended was operation of the Money Market Fund Liquidity Facility, which helped to prevent potential runs on money-market mutual funds.
In his remarks, Powell said that the Fed's "broad and forceful actions" had helped unlock almost $2 trillion in funding to support "businesses large and small, nonprofits and state and local governments since April."
Following their appearance Tuesday before the Senate Banking Committee, Powell and Mnuchin were scheduled to testify Wednesday at an oversight hearing being held by the House Financial Services Committee.