Fed Chief Says More Relief Spending May Be 'Costly, But Worth It'
Powell said the economy should recover once the virus is under control. But he cautioned that without more help, many small businesses may not survive that long. And he warned that a wave of business and household bankruptcies could do lasting damage to the nation's economic output.
"We ought to do what we can to avoid these outcomes," Powell said, in a speech to the Peterson Institute for International Economics. He noted that Congress has already provided $2.9 trillion to prop up the economy — "the fastest and largest response for any postwar downturn" — but said more federal spending is needed.
"Additional fiscal support could be costly, but worth it if it helps avoid long-term damage and leaves us with a stronger recovery," Powell said. House Democrats unveiled an additional $3 trillion spending proposal this week.
Powell said the central bank would continue to use its own tools to support the economy, but he dismissed the idea of negative interest rates.