The surge in US coronavirus cases is beginning to weigh on economic activity, the head of the Federal Reserve says, and he promised the US central bank will "do what we can, and for as long as it takes," to limit damage and boost growth.
"It looks like the data are pointing to a slowing in the pace of the recovery," Fed Chair Jerome Powell said at a news conference on Wednesday, pointing to an apparent pullback by consumers and a slowdown in the rehiring of furloughed workers, particularly by small businesses.
The United States, he said, "has entered a new phase in containing the virus, which is essential to protect both our health and our economy."
Powell's comments, made via videoconference after the Fed announced its policy decision to leave interest rates near zero, suggest dimming hopes for a quick economic rebound.
Coronavirus infections have exploded in a number of Southern and Southwestern states in recent weeks, and some states have paused or rolled back reopening measures.
The Fed's policy statement, released at the close of its two-day meeting, directly tied the economic recovery to resolution of a health crisis whose direction remains much in doubt. More than 150,000 Americans have died from COVID-19, the respiratory illness caused by the novel coronavirus.
"The path of the economy will depend significantly on the course of the virus," the central bank's policy-setting Federal Open Market Committee (FOMC) said.
In his news conference, Powell elaborated on just how much remained unclear about the direction of the world's largest economy. Fiscal programs that he credits with sustaining consumer spending in recent weeks are about to expire, with debate still under way in Congress over what, if anything, will take their place.
"That data show that on balance ... the pace of the recovery looks like it has slowed since cases began that spike," he said. "I want to stress," he added, "it's too early to say both how large that is and how sustained that is."
Fed policymakers repeated a pledge to use their "full range of tools" to support the economy and keep interest rates near zero for as long as it takes to recover from the epidemic.
All FOMC members voted to leave the target range for short-term rates between 0 and 0.25 per cent, where it has been since March 15 when the virus was beginning to hit the nation.
"We are not even thinking about thinking about thinking about raising rates," Powell said, noting the economic recovery will take a long time because millions of people working in heavily affected industries like hotels or restaurants won't have jobs to go back to any time soon.
Government aid that kept millions of unemployed Americans spending will drop sharply at the end of this week unless Congress agrees on a new relief package, with Republicans and Democrats so far not able to bridge their differences.