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MNI BRIEF: Powell: Tough Near Term Outlook, Fiscal Aid Needed

WASHINGTON (MNI)

Federal Reserve Chair Jerome Powell told lawmakers Wednesday the economy faces a "challenging" near term outlook as the pandemic puts small businesses and poor households under strain that could be eased with more fiscal relief.

Sitting beside Treasury Secretary Steven Mnuchin, who also urged Congress to provide new funding in a lame-duck session, Powell said the economy also faces long-term damage from business failures and home foreclosures. Unemployment among the poorest group of Americans is 20%, and state and local governments may lay off workers to meet balanced budget laws, Powell said.

"You could lose parts of the economy and that will mean a slower recovery," Powell told a committee hearing. He also said the Fed's statement contradicting Mnuchin's decision to wind down lending facilities at year-end was to assure the public the Fed wasn't "stepping back" from its pledge to do all it can to support the economy.

"We're not considering pulling back any of our support for the economy," Powell said, and when the time comes it will be done "slowly and carefully."

MNI Ottawa Bureau | +1 613-314-9647 | greg.quinn@marketnews.com
MNI Ottawa Bureau | +1 613-314-9647 | greg.quinn@marketnews.com

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