Amid the recovery of the coronavirus pandemic in the United States, US Central Bank President Jerome Powell on Wednesday urged politicians to take new measures to support the economy.
Unsurprisingly, the US Federal Reserve (Fed) announced that it was keeping rates in a range of 0 to 0.25%. This decision was taken unanimously and the rates will be maintained at this level as long as the economy is not fully recovered from the shock caused by the health crisis, the powerful institution said.
“The pace of the economic recovery is closely linked to the evolution of the virus,” commented the Fed in a statement released after its monetary meeting.
“After a marked deterioration, economic activity and employment have picked up again in recent months, but they remain well below their levels at the start of the year,” she added.
Worse, “the increase in cases of contamination by the virus and the measures taken to control it are beginning to weigh on economic activity,” said Jerome Powell at a press conference.
In this context, the future pace of the US economy is “extraordinarily uncertain”.
And, Mr Powell insisted, a real recovery “will depend in large part on our success in controlling the virus.”
The Fed is also determined to deploy all the tools at its disposal to continue supporting the economy devastated by the pandemic.
Since March, it has stepped up actions to allow the US economy to continue to function despite the paralysis in March and attempts to recover since May.
The Fed has repeatedly emphasized the importance of the financial support provided by the federal government to households and businesses.
Democrats and Republicans in Congress have started negotiating a new $ 1 trillion aid plan, but talks are shaping up to be tense, less than 100 days before the presidential election.
For its part, the Fed announced on Tuesday that it would extend until December 31 several loan programs put in place to help businesses and communities cope with the crisis, and which were initially due to end “around the 30th. September”.
After a period of optimism thanks to the restart of economic activity in several states, the pandemic has resumed in the United States, the most bereaved country in the world with more than 148,000 deaths.
The situation is particularly worrying in California, Florida and Texas, where authorities have been forced to reinstate containment measures, to varying degrees.
The layoffs of employees kept year after year since the end of March, or newly rehired, even pushed up jobless claims in mid-July, for the first time since the end of March.
The Central Bank also announced, in a separate press release, the extension until March 31, 2021 of “swap” agreements, set up in March in response to the advance of the pandemic, to allow nine of its counterparts including the institution of Brazil, Australia and the Nordic countries, to easily access dollars.
Another device, put in place at the end of March to allow foreign central banks to have easy access to dollars by exchanging “temporarily” their US Treasury bills for greenbacks, is also extended until March 31, 2021.
The objective is to maintain “significant liquidity reinforcements”.
The monetary committee met on Tuesday and Wednesday, amid an upsurge in Covid-19 cases in the United States, which has prompted several states to slow down the economic recovery.
US second-quarter GDP is due for release on Thursday, expected to drop by at least 35%.
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