Federal Reserve Chairman Jerome Powell said big questions remain over the outlook for the economy, particularly in light of ongoing efforts to contain the coronavirus pandemic.
In remarks he will deliver Tuesday to the House Financial Services Committee, the central bank leader turned up concerns he had expressed earlier this month about growth as the U.S. remains mired ina recession that began in February.
"Output and employment remain far below their pre-pandemic levels. The path forward for the economy is extraordinarily uncertain and will depend in large part on our success in containing the virus," Powell said.
"A full recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities," he added. "The path forward will also depend on the policy actions taken at all levels of government to provide relief and to support the recovery for as long as needed."
His remarks come amid a national spike in coronavirus cases rooted in states that have more aggressively relaxed restrictions implemented to contain the pandemic.
Powell stressed the importance of building on recent momentum, which he said will be predicated on the path of the virus.
"Many businesses are opening their doors, hiring is picking up, and spending is increasing. Employment moved higher, and consumer spending rebounded strongly in May," he said. "We have entered an important new phase and have done so sooner than expected. While this bounceback in economic activity is welcome, it also presents new challenges — notably, the need to keep the virus in check."
In response to the pandemic, the Fed has implemented a variety of programs aimed at keeping markets functioning and directly lending where it is needed.
The Fed also has cut its benchmark short-term lending rate to near zero, where Powell pledged to keep it until the economy recovers.
"In March, we lowered our policy interest rate to near zero, and we expect to maintain interest rates at this level until we are confident that the economy has weathered recent events and is on track to achieve our maximum-employment and price-stability goals," he said. "We will closely monitor developments and are prepared to adjust our plans as appropriate to support our goals."