US Fed chairman urges Congress to not pull back fiscal stimulus too fast

Jerome Powell's comment comes amidst debate on whether to extend fiscal support provided to businesses and households

FILE PHOTO: U.S. Federal Reserve Chairman Jerome Powell speaks to reporters after the Federal Reserve cut interest rates in an emergency move designed to shield the world's largest economy from the impact of the coronavirus, during a news conference in Washington, U.S., March 3, 2020. REUTERS/Kevin Lamarque/File Photo
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Federal Reserve Chair Jerome Powell urged Congress not to pull back too quickly on federal relief to households and small businesses amid increasing debate over whether to extend temporary programmes that were put in place to shield them from the pandemic.

“I would think that it would be a concern if Congress were to pull back from the support that it’s providing too quickly,” Mr Powell said Wednesday while answering questions before the House Financial Services Committee.

“I do think it would be appropriate to think about continuing support for people who are newly out of work and for smaller businesses who are struggling,” Mr Powell said. “The economy is just now beginning to recover. It’s a critical phase and I think that support would be well-placed at this time.”

Mr Powell was answering a question from Representative Maxine Waters, the California Democrat who chairs the committee. Representative Patrick McHenry, the North Carolina Republican who is the party’s ranking member on the committee, quickly followed up by warning the Fed chair to stay in his lane.

“Monetary and fiscal policy are two very different things. I would urge you and the leadership of the Fed to stick to monetary policy,” Mr McHenry said.

“Your words of encouragement that we have our responsibilities on the fiscal side of the house I think are well-noted, and what you are telling us about the employment marketplace on a going-forward basis, I think, is informative for our policy-making,” he said. “And so, thank you for your statements there, that additional congressional action is required.”