Powell says economy recovering but Fed support still needed

FILE - In this Tuesday, Dec. 1, 2020, file photo, Federal Reserve Chairman Jerome Powell, right, testifies before the Senate Banking Committee on Capitol Hill in Washington. Powell says the economic recovery from the coronavirus pandemic has progressed more quickly than expected. But still, he says the central bank does not intend to let up in its support efforts. (AP Photo/Susan Walsh, Pool, File)
FILE - In this Tuesday, Dec. 1, 2020, file photo, Federal Reserve Chairman Jerome Powell, right, testifies before the Senate Banking Committee on Capitol Hill in Washington. Powell says the economic recovery from the coronavirus pandemic has progressed more quickly than expected. But still, he says the central bank does not intend to let up in its support efforts. (AP Photo/Susan Walsh, Pool, File) (Copyright 2020 The Associated Press. All rights reserved.)

WASHINGTON – Federal Reserve Chairman Jerome Powell says the economic recovery from the coronavirus pandemic has progressed more quickly than expected, but the central bank does not intend to let up in its support efforts.

In congressional testimony released Monday, Powell said that even though the recovery appears to be strengthening, there are still many pockets of weakness in the U.S. economy.

“The sectors of the economy most adversely affected by the resurgence of the virus and by greater social distancing remain weak,” he said in his remarks prepared for an oversight hearing of the House Financial Services Committee on Tuesday.

“The recovery is far from complete, so, at the Fed, we will continue to provide the economy the support it needs for as long as it takes," Powell said.

Powell noted that the unemployment rate is still elevated at 6.2%, a statistic that does not fully reflect the number of jobless Americans who have given up and dropped out of the labor force.

He said the Fed will “not lose sight of the millions of Americans who are still hurting, including lower-wage workers in the services sector, African Americans, Hispanics and other minority groups that have been especially hard hit.”

At its meeting last week, the Fed kept its benchmark interest rate at a record low of 0% to 0.25%. Even though it significantly raised its economic forecast, it continued to signal that its benchmark rate would remain where it is through 2023, giving a boost to financial markets.

Powell and Treasury Secretary Janet Yellen will testify Tuesday before the House panel and then testify Wednesday before the Senate Banking Committee in oversight hearings that were mandated by Congress when it passed relief legislation last year.