MORE STIMULUS NEEDED TO HELP U.S. ECONOMY: FED

— The trajectory of Covid-19 remains key to the US recovery and until it is eradicated, more emergency spending will be “essential” to support the economy, Federal Reserve chair Jerome Powell said.

But with America’s knife-edge election yet to be called, as state officials continue to tally ballots, the potential for a split government in Washington makes it less likely Congress will end months of gridlock and quickly approve another giant spending package to help workers and businesses. Powell steered away from any discussion of politics, saying the economy — not the election — was the focus of the two-day meeting of the Fed’s policy-setting Federal Open Market Committee. The recent spike in Covid-19 cases is “particularly concerning” for the US economy, Powell told reporters. While the United States has done better than expected economically, the outlook “is extraordinarily uncertain,” he said.

The Fed chief warned that despite a jump in growth, “the pace of improvement has moderated” and spending has slowed, while the economy has regained just half the jobs lost in March and April.

“Fiscal policy can do what we can’t, which is to replace lost incomes for people who are out of work through no fault of their own,” Powell said, calling government spending measures “absolutely essential.” —

A full economic recovery is unlikely until people are confident that it’s safe to re-engage in a broad range of activities Jerome powell, Chairman of the US Federal Reserve