MIL OSI Translation. Region: Russian Federation –
The head of the Federal Reserve System (FRS) Jerome Powell again called on the US Congress and the White House to agree on the parameters of a new package of fiscal support measures aimed at stimulating economic recovery, the pace of which weakened in August and September compared to May-June. Mr. Powell noted that excessive measures will be less harmful than insufficient ones. Negotiations on the package, however, are still pending – last Thursday, the House of Representatives of the US Congress formally approved a $ 2.2 trillion Democratic plan, but it has little chance of Senate approval.
The US economy will recover “stronger and faster” if the amount of fiscal support is large, Fed Chairman Jerome Powell said on Tuesday, pointing out that this is necessary to prevent a decline in employment and that “even if the measures turn out to be larger than the market demands, they will not be wasted. ” Insufficient support for the economy is a big risk, which can undermine the recovery process – an increase in the number of bankruptcies of households and companies can lead to a decrease in productivity and limit salary growth.
A slowdown in the economy could provoke its transition to a typical recessionary dynamics, as the weakness of some indicators will increase the weakness of others, the head of the Fed warned.
Note that this scenario also worries the head of the second largest monetary regulator, the European Central Bank (ECB), Christine Lagarde – according to her, the recovery of the eurozone economy also “looks a little less stable” in the context of the second wave of COVID-19, and new, although relatively mild so far, the restrictive measures will affect growth and may impede V-trajectory recovery. At the same time, according to Jerome Powell, the pace of recovery of the American economy has already slowed down compared to May and June, and incomes of the population fell in August. The growth in the number of jobs, according to American statistics, also slowed down to 661 thousand against 1.5 million in August.
Prior to this, the head of the FRS has repeatedly called on Congress to approve a new package of tax, budgetary and financial measures to support economic growth, which, among other things, is indirect evidence of the exhaustion of the regulator’s resources (unlike the ECB, the possibility of lowering rates to a negative level by the American Open Market Committee is being considered, while various liquidity programs have already been activated). Recall that following the results of the last meeting, the regulatorcorrectedwording in accordance with the adopted change in its own long-term goals – the Fed will strive for the inflation rate “slightly above 2%” so that the average inflation rate is 2%, and long-term expectations correspond to it (since 2010 there were only 13 months when the indicator was higher levels, inflation averaged 1.6%).
In negotiations on a new stimulus package, however, no agreement has yet been reached – House Speaker Nancy Pelosi said that, in her opinion, the process of agreeing on its content with the US Treasury Secretary is “very slow.” Last Thursday, the House of Representatives of Congress approved a $ 2.2 trillion plan for Democrats, but the White House believes that spending should not exceed $ 1.6 trillion, so the bill has little chance of passing in the Senate, where the majority of seats are held by Republicans. … Note that the new stage of stimulation is comparable in scale with the first one that provided the recovery growth of the US economy after the spring coronavirus recession: at the end of March, Congressapproveda package of support measures for $ 2.2 trillion, followed byfollowedanother, in May, for $ 483 billion.
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EDITOR’S NOTE: This article is a translation. Apologies should the grammar and / or sentence structure not be perfect.