WASHINGTON (AP) — The Federal Reserve has promised to use its "full range of tools" to pull the
country out of a deep recession caused by a global pandemic, signaling that it would keep interest rates
low through 2022.
In its semi-annual monetary policy report to Congress, the central bank said Friday that the COVID-19
outbreak was causing "tremendous human and economic hardship across the United States and around
the world."
In response, the Fed said it’s "committed to using its full range of tools to support the U.S.
economy in this challenging time."
The Fed’s report comes two days after a policy meeting where the central bank kept it benchmark interest
rate at a record low of zero to 0.25% and signaled that it planned to keep it there for some time. The
Fed said it would keep buying billions of dollars of Treasury and mortgage-backed securities to support
the operations of financial market.
Federal Reserve Chairman Jerome Powell will testify before congressional committees on the new report
Tuesday and Wednesday. He is expected to face questioning from lawmakers eager to know how the central
bank plans to further support the economy during what is expected to be the steepest economic downturn
of the last seven decades.
During a news conference on Wednesday, Powell predicted that the recovery will likely be slow with
"well into the millions" of Americans who will not be able to get their old jobs back.
Powell’s downbeat assessment of how long it could take labor market to recover along with other renewed
fears about the pandemic’s impact on the economy helped trigger a huge selloff in the market on Thursday
with the Dow Jones industrial average falling 1,861.82 points, or 6.9%.
After the market plunge, President Donald Trump sent out a tweet criticizing the Fed and Powell’s
comments that a full economic recovery could take a long time.
"The Federal Reserve is wrong so often," Trump tweeted. "I see the numbers also, and do
MUCH better than they do. We will have a very good Third Quarter, a great Fourth Quarter, and one of our
best ever years in 2021."
In its report to Congress, the Fed noted the sharp deterioration that has occurred in the labor market
with nearly 20 million jobs lost since February, "reversing almost 10 years of job gains."
The report said, "The most severe job losses have been sustained by the socioeconomic groups that
are disproportionately represented among low-wage jobs."
