The surge in U.S. coronavirus cases and the restrictions aimed at containing it have begun to weigh on the economic recovery, the head of the Federal Reserve said on Wednesday, pointing to an apparent pullback by consumers and a slowdown in the rehiring of furloughed workers, particularly by small businesses.
“We have seen some signs in recent weeks that the increase in virus cases and the renewed measures to control it are starting to weigh on economic activity,” Fed Chair Jerome Powell said in a news conference following release of the U.S. central bank’s latest policy statement.
“The path of the economy will depend significantly on the course of the virus,” the central bank’s policy-setting Federal Open Market Committee said. The Fed held policy largely steady at its two-day policy meeting this week, with key decisions likely to come this fall after it is clearer where the health crisis is heading and how forcefully Congress does or does not add to the support available for struggling businesses and unemployed workers.
“The Committee expects to maintain this target range 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 statement said. The policy statement on Wednesday gave no hint of such a change, which many Fed analysts expect won’t come until the September meeting.
The U.S. central bank has rolled out nearly a dozen new lending and credit programs to fight the economic fallout from the epidemic. But the immediate outlook hinges largely on where infections go from here and how much more fiscal support lawmakers deliver in the meantime.
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