Powell said that though stimulus efforts from Congress and the Fed in the US had been “quite strong” thus far, “my sense is that we will need to do more, and Congress may need to do more as well in fiscal policy.”
A multi-trillion-dollar stimulus, enacted early this year, had helped sustain jobless Americans and ailing businesses but has since expired. The failure of US politicians to agree on any new aid has clouded the future for the unemployed, for small businesses and for the economy as a whole. There is some hope, though, that a logjam can be broken and more economic relief can be enacted during a post-election “lame-duck” session of Congress between now and early January.
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Bailey said that the vaccine news “is encouraging and we need encouraging signs” at the moment but pointed out that the vaccine “is not here yet.”
Lagarde said central banks and governments would need to continue to provide support to “help bridge over to the other side of the river” to avoid long-lasting damage to the economy. “I don’t want to be exuberant about this vaccination,” she said.
Powell said that technological change accelerated by the pandemic would leave some workers struggling to adapt. “We’re recovering to a different economy,” he said, and there will be a substantial number of workers who will need support as the economy is changed by the pandemic.
All three central banks have deployed large-scale stimulus such as interest rate cuts and bond purchases that aim to keep borrowing costs affordable for businesses. Lagarde has said there is “little doubt” the central bank for the 19 countries that use the euro would add more stimulus at its December 10 meeting, while Powell has said that policymakers discussed last week whether and how their bond buying program might be altered to provide more economic support.
The Fed is buying $US120 billion ($166 billion) a month in bonds — $US80 billion in Treasurys and $US40 billion in mortgage bonds — to try to keep long-term borrowing costs low.
