WASHINGTON—Federal Reserve Chairman Jerome Powell said he does not anticipate the country will enter into a recession anytime soon, but Powell did call on Congress to reduce the federal budget deficit to ensure the Fed is able to respond to a financial crisis when one arrives.
Powell appeared before the Senate Banking Committee one day after offering similar remarks to the House.
Speaking to the House Financial Services Committee as part of the central bank's semiannual monetary policy report, Powell detailed in his opening statement the current economy situation and monetary policy. As CUToday.info reported, the Federal Open Market Committee (FOMC) maintained rates at the current range at the end of its meeting last month.
Powell acknowledged lawmakers' concerns over what effect the coronavirus might have on the economy, saying that the Fed is "closely monitoring the emergence of the coronavirus, which could lead to disruptions in China that spill over to the rest of the global economy."
Powell Addresses CRA
Powell was also asked about federal banking regulators' efforts to modernize the Community Reinvestment Act (CRA), which some Democratic lawmakers have said could undermine that law.
The Office of the Comptroller of the Currency (OCC) has released its own reform plan related to CRA – without the support of the Federal Reserve and FDIC. Credit unions currently are not subject to the federal law. NAFCU noted it has actively opposed extending CRA regulations to credit unions, as they do not engage in the illegal and discriminatory practices of banks.
During his remarks, Powell also said:
- He sees no need for Fed action related to the move away from LIBOR.
- “Putting the federal budget on a sustainable path when the economy is strong would help ensure that policymakers have the space to use fiscal policy to assist in stabilizing the economy during a downturn. A more sustainable federal budget could also support the economy’s growth over the long term.”