Fed Officials Said the Economy Needed More Help From Congress

With some stimulus provisions “set to expire shortly against the backdrop of a still-weak labor market, additional fiscal aid would likely be important for supporting vulnerable families, and thus the economy more broadly, in the period ahead,” some participants said, according to the minutes.

Senate Republicans began circulating the text of a narrow coronavirus relief package on Tuesday, but it is unlikely that Democrats will sign on. As such, it remains unclear whether and when additional government support for newly unemployed Americans and struggling businesses will materialize.

The Fed has taken actions to support the economy, but its policies can set the backdrop for growth to make it cheap to borrow and spend — they do not directly put money in consumers’ and companies’ pockets. That task falls to Congress.

Since the late-July Fed gathering, real-time indicators of consumer spending have continued to muddle along without showing much further improvement. The stock market, on the other hand, has continued to surge, with key indexes touching new highs.

The Fed has also been reviewing its policy framework — the guiding principles it follows when setting interest rates and other monetary policies — for more than a year. It is widely expected to soon announce that it is scrapping its long-held practice of raising rates pre-emptively in an effort to choke off coming inflation, opting instead for an approach that will allow price increases to run above the official 2 percent goal for a time.

Article source: https://www.nytimes.com/2020/08/19/business/economy/fed-meeting-minutes-coronavirus.html