By Yasin Ebrahim
Investing.com - Federal Reserve Chairman Jerome Powell will reiterated the central bank's plan to support the recovery "for as long as its takes" as the economy remains below pre-pandemic levels, according to the release of his prepared testimony to Congress on Tuesday.
In his testimony, Powell will acknowledge that the recovery has progressed more quickly than expected, but stress that the Fed will "continue to provide the economy the support that it needs for as long as it takes ... as sectors of the economy most adversely affected by the resurgence of the virus, and by greater social distancing, remain weak," according to the prepared remarks.
"The recovery has progressed more quickly than generally expected and looks to be strengthening. This is due in significant part to the unprecedented fiscal and monetary policy actions I mentioned, which provided essential support to households, businesses, and communities."
The labor market, in particular, remains a concern for the Fed, with the unemployment rate, and the labor participation rate still lag pre-pandemic levels.
"The unemployment rate—still elevated at 6.2 percent—underestimates the shortfall, particularly as labor market participation remains notably below pre-pandemic levels," the statement said. "We are committed to using our full range of tools to support the economy and to help assure that the recovery from this difficult period will be as robust as possible on behalf of communities, families, and businesses across the country."
The Fed chief will also hail the success of the central bank's emerging lending programs that have helped stave off a credit crunch. "Our programs served as a backstop to key credit markets and helped restore the flow of credit from private lenders through normal channels," according to the statement.
"Our actions, taken together, helped unlock more than $2 trillion in funding to support businesses large and small, nonprofits, and state and local governments between April and December. This support, in turn, has helped keep organizations from shuttering and put employers in both a better position to keep workers on and to hire them back as the recovery continues."