Federal Reserve officials expressed concern at their most recent meeting that the US economic recovery could falter if Congress fails to approve another round of pandemic relief.
Minutes of the meeting showed that officials believe the economy was growing faster than expected. But they based their forecasts on expectations that Democrats and Republicans would resolve their differences and provide more economic aid, including expanded unemployment benefits and help for small businesses.
The minutes said that “most forecasters were assuming that an additional pandemic-related fiscal package would be approved this year, and noted that, absent a new package, growth could decelerate at a faster-than-expected pace in the fourth quarter.”
The prospects for a new package being passed before the Nov. 3 elections, however, have significantly diminished with President Trump’s decision to end negotiations with Democrats. Trump has instead proposed that Democrats approve individual rescue items, such as money for ailing airlines and another round of $1,200 checks for most adults, rather than a comprehensive aid package.
Federal Reserve chairman Jerome Powell warned in a speech Tuesday of potentially tragic consequences if Congress and the White House do not provide further assistance, saying “the [economic] expansion is far from complete.”
The minutes covered the Fed’s Sept. 15-16 meeting, in which officials left their key policy rate unchanged at a record low near zero and signaled that they expected to keep rates at ultra-low levels at least through 2023.
The Fed’s statement incorporated a policy change to allow inflation to rise above its 2 percent target for a period of time. That change is seen as allowing it to keep interest rates lower for a longer period.
The September statement was approved on a 10-2 vote. The minutes recognized large problems in trying to forecast the path of the economy.
“Participants continued to