Fed Chair Powell says more action may be needed to fend off lasting economic damage - Business Insider

The economic recovery from the coronavirus pandemic may be a slow one, Federal Reserve Chair Jerome Powell said in a Wednesday event for the Peterson Institute for International Economics.He added that more fiscal support could be necessary to avoid long-term economic damage.“While the economic response has been both timely and appropriately large, it may not be the final chapter, given that the path ahead is both highly uncertain and subject to significant downside risks,” Powell said.Visit Business Insider's homepage for more stories.

Federal Reserve Chair Jerome Powell cautioned on Wednesday that the US economic recovery from the fallout of the coronavirus would likely be slow and require more fiscal stimulus.The recovery “may take some time to gather momentum, and the passage of time can turn liquidity problems into solvency problems,” Powell said in an event for the Peterson Institute for International Economics.He continued: “Additional fiscal support could be costly but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery.”Powell's remarks came two months into the worst economic downturn since the Great Depression. In April, the US economy lost a record 20.5 million jobs and saw the unemployment rate spike to 14.7%.

Long stretches of unemployment can leave families in greater debt, Powell said. And losing thousands of small and medium-sized businesses “would destroy the life's work and family legacy of many business and community leaders and limit the strength of the recovery when it comes,” he said.Read more: A real-estate investor who generates $342,000 of annual cash flow shares his unique spin on a popular investment strategy that's helped land him 114 unitsPowell cheered the actions of the government so far, noting how swiftly different groups had acted to send relief to Americans. The Federal Open Market Committee slashed interest rates to zero in March and has since gone beyond its 2008 playbook with emergency lending and buying programs to support the economy.Congress has allocated nearly $3 trillion in funding to support small businesses, American households, and more.

Still, there could be more to come. “While the economic response has been both timely and appropriately large, it may not be the final chapter, given that the path ahead is both highly uncertain and subject to significant downside risks,” Powell said.Read more: BTIG says buy these 25 under-the-radar stocks that been neglected for years, because they're tempting M&A targets with big upsideHouse Democrats on Tuesday proposed an additional $3 trillion coronavirus relief bill. The Fed also took another unprecedented step this week when it began buying corporate bond exchange-traded funds.When the crisis subsides, the central bank will “put these emergency tools away,” Powell said. Still, he reaffirmed the central bank's “whatever it takes” approach to provide support until the crisis has passed and the economic recovery is underway.