More stimulus needed to help US economy, says Fed's Powell

WASHINGTON: The trajectory of Covid-19 remains key to the US recovery and until it is eradicated, more emergency spending will be "essential" to support the economy, Federal Reserve Chair Jerome Powell said Thursday.

But with America's knife-edge election yet to be called, as state officials continue to tally ballots, the potential for a split government in Washington makes it less likely Congress will end months of gridlock and quickly approve another giant spending package to help workers and businesses.

Democratic challenger Joe Biden appears well-positioned to unseat President Donald Trump, but Republicans could retain control of the Senate - although the final outcome may not be known for weeks, until after at least one run-off election in Georgia.

Powell steered away from any discussion of politics, saying the economy - not the election - was the focus of the two-day meeting of the Fed's policy-setting Federal Open Market Committee (FOMC).

The recent spike in Covid-19 cases is "particularly concerning" for the US economy, Powell told reporters.

While the United States has done better than expected economically, the outlook "is extraordinarily uncertain," he said. The Fed chief warned that despite a jump in growth, "the pace of improvement has moderated" and spending has slowed, while the economy has regained just half the jobs lost in March and April.

"A full economic recovery is unlikely until people are confident that it's safe to re-engage in a broad range of activities," he said.

The support provided by the $2.2 trillion CARES Act "was absolutely essential in supporting the recovery that we've seen so far, which has generally exceeded expectations," he said, but "further support is likely to be needed."

The central bank chief has been increasingly vocal in his calls for Washington to spend more to help support the recovery after most provisions of a massive stimulus measure passed in March expired.