Federal Reserve Chairman Jerome Powell reiterated his commitment to an “all-in” approach to the recovery, pledging in a commentary piece for the Wall Street Journal to keep policy loose.
Noting the “much improved” economy, the central bank leader said American resolve and aggressive policy have combined to make the outlook ahead brighter.
“But the recovery is far from complete, so at the Fed we will continue to provide the economy with the support that it needs for as long as it takes,” he wrote. “I truly believe that we will emerge from this crisis stronger and better, as we have done so often before.”
Powell’s comments come two days after the Fed voted to keep benchmark short-term borrowing rates anchored near zero and to continue a program that entails purchasing at least $120 billion a month in bonds.
Along with those measures has come a pledge from central bank officials to not change policy until the economy reaches full and inclusive employment gains, even if that means allowing inflation to run hotter than the Fed’s traditional 2% target for a period of time.
Such an approach is essential to keep the recovery going, Powell said.
“The scope of the crisis required an all-in government response,” he wrote. “Congress provided its largest economic recovery package of the postwar era. At the Fed, we used all the tools at our disposal to prevent a financial meltdown and ensure that credit could continue to flow to households and businesses.”
Powell noted that the biggest impact of the Covid-19 crisis continues to fall on those least able to bear it, underscoring the importance of aggressive policy.
—Read the full Powell commentary here.