Powell: "Early End to Economic Support Would Be a Concern"

[Asia Economy New York=Correspondent Baek Jong-min] Jerome Powell, Chairman of the United States Federal Reserve (Fed), expressed opposition on the 17th (local time) to ending financial support for businesses and households implemented to overcome the novel coronavirus infection (COVID-19).

[Image source=Reuters Yonhap News]

On the 17th (local time), Chairman Powell appeared before the House Financial Services Committee following his appearance at the Senate Banking Committee the previous day, stating, "It would be a concern if Congress withdraws support for households and businesses too quickly."

Chairman Powell said, "I believe it is appropriate to continue support for unemployed individuals and struggling small businesses," emphasizing, "The U.S. economy has just begun to recover from the COVID-19 shock. This is a critical phase."

He cited the entertainment and tourism industries as examples, saying, "Workers in these sectors will continue to face difficulties until COVID-19 becomes a thing of the past," and argued, "There is a need to help them."

Powell's remarks are interpreted as emphasizing that various supports currently implemented through fiscal policy to overcome COVID-19 should not be withdrawn prematurely. Congress has so far introduced various support measures amounting to about $3 trillion in response to COVID-19.

Earlier, Larry Kudlow, Chairman of the White House National Economic Council (NEC), announced on the 14th that the additional $600 weekly unemployment benefits paid to workers who lost their jobs due to COVID-19 under the CARES Act would end as planned on July 31 to prevent discouragement among workers returning to their workplaces.

On the other hand, the Democratic Party holds the position that the additional unemployment benefits should be extended for another six months. With the positions of the ruling and opposition parties diverging, Powell is interpreted as supporting the Democrats' stance. The Wall Street Journal reported that Democratic lawmakers tried for two consecutive days to elicit from Chairman Powell the necessity of extending economic support legislation.

On Wall Street, the surprise 17.7% increase in retail sales in May is also analyzed as an effect of cash payments and expanded unemployment benefits provided by the U.S. government to households, and there are concerns that negative impacts are expected once the policy effects disappear.

Chairman Powell reiterated on this day that the Fed will use all available means to protect households and businesses from the COVID-19 shock.

He emphasized at the Senate Banking Committee the previous day, "There remains great uncertainty regarding the timing and strength of the economic recovery."

He also stated that financial markets are functioning normally, and that the Fed plans to gradually reduce purchases of exchange-traded funds (ETFs) and focus on buying individual corporate bonds.

This content was produced with the assistance of AI translation services.