Fed officials say coronavirus outbreak poses 'considerable risk' to US economy

Powell says Fed’s tools to combat coronavirus will remain until economy improves

Federal Reserve Chair Jerome Powell and Treasury Secretary Steven Mnuchin testify before a Senate committee regarding the CARES Act. FOX Business’ Edward Lawrence with more.

Federal Reserve officials agreed during their policy-setting meeting at the end of April that the coronavirus pandemic continued to pose a "considerable risk" to the U.S. and pledged to deploy their full arsenal to protect the economy.

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The central bank on Wednesday released minutes from its virtual gathering — the first since the crisis began — held on April 28 and 29, during which policymakers vowed to use their "tools and act as appropriate to support the economy.”

"Participants judged that the effects of the coronavirus outbreak and the ongoing public health crisis would continue to weigh heavily on economic activity, employment, and inflation in the near term and would pose considerable risks to the economic outlook over the medium term," the minutes said. "Participants assessed that the second quarter would likely see overall economic activity decline at an unprecedented rate."

The Fed reiterated previous guidance that the benchmark federal fund rate will remain at a range between 0 percent and 0.25 percent "until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”

The Fed has already taken a range of extraordinary actions to support the economy, including slashing interest rates to near-zero, purchasing an unlimited amount of Treasurys (a practice known as quantitative easing) and launching crisis-era lending facilities to ensure that credit flows to households and businesses. It has also said it will buy corporate bonds and lend to states and cities.

Officials have said rates will remain near-zero until the U.S. weathers the crisis.

In the past two months, the Fed has pumped about $2.9 trillion into the economy, an unprecedented amount, and its balance sheet has swelled to $7 trillion.

This is a developing story. Please check back for updates. 

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