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Powell at a congressional hearing in September. Photo: Stefani Reynolds/Bloomberg via Getty Images

Federal Reserve chair Jerome Powell said on Thursday the pandemic-hit economy will recover at a slower pace absent additional stimulus from Congress.

Why it matters: With Congress still gridlocked over another stimulus package — and pending results of the presidential election that put the timing of another package more in limbo — the Fed is facing questions about what more it can do to prevent the economy from backsliding as coronavirus cases surge.

What they're saying: "Fiscal policy can do what we can't, which is to replace lost incomes for people who are out of work," Powell told reporters in response to a question about whether the delay of congressional stimulus will force the Fed to do more.

  • Powell also said that "we'll have a stronger [economic] recovery if we can just get at least some more fiscal support" — but stopped short of saying how much support is necessary.
  • Powell reiterated that the Fed is not out of ammo — but its policies are a mismatch for the demands of the crisis. "We have no doubt in the power of the things that we've already done, or the things that we may or may do in the future," Powell said.

Details: Powell said the Fed for now would continue to purchase at least $120 billion worth of government bonds per month, although disruptions in financial markets that prompted the buying have eased.

  • The bond-buying program is "another very important piece of the accommodative policy stance that we have," Powell said.

Where it stands: In the policy statement released ahead of the news conference, the Fed said, "economic activity and employment have continued to recover but remain well below their levels at the beginning of the year."

  • Powell noted the rise in coronavirus cases in the U.S. and Europe as "particularly concerning."

Catch up quick: Earlier this year, the Fed launched a slew of programs, backstopped by the Treasury Department, in an attempt to stimulate the economy and shore up key funding markets that were shaken when the virus took hold.

  • There's been little demand from state and local entities for a lending facility geared to them, as well as muted uptake for a program meant to lend to small and mid-sized businesses. (The Fed broadened eligibility for its so-called "Main Street Lending Program" last week.)
  • Powell says the Fed has not decided whether these facilities will be extended beyond their expiration at the end of the year.

Of note: Powell said the election "comes up now and again but is not at all a central focus" of the Fed's policy meeting. He wouldn't comment on the possibility of a contested election and whether it could have an impact on the economy.

  • "I'm very reluctant, as you will imagine, to comment on the election directly, indirectly at all, other than just to say that it's a good time to take a step back and let the institutions of our democracy do their jobs," Powell said.

Go deeper

Updated Jan 28, 2021 - Economy & Business

2020 was the economy's worst year since 1946

Source: FRED; Billions of chained 2012 dollars; Chart: Axios Visuals

One of the last major economic report cards of the Trump era lends perspective to the historic damage caused by the pandemic, which continued to weigh on growth in the final quarter of 2020.

By the numbers: The U.S. economy grew at a 4% annualized pace in the fourth quarter, a sharp slowdown in growth compared to the prior quarter. For the full year, the economy shrank by 3.5% — the first annual contraction since the financial crisis and the worst decline since 1946.

41 mins ago - Health

First known U.S. case of the Omicron variant identified in California

PhotoL Chip Somodevilla/Getty Images

The first known U.S. case of the Omicron variant was detected in California, the Centers for Disease Control and Prevention confirmed Wednesday.

Driving the news: The confirmed case was detected in a traveler returning from South Africa who was fully vaccinated and has mild symptoms, according to the CDC.

Supreme Court appears likely to roll back abortion rights

Abortion rights advocates and anti-abortion protesters demonstrate in front of the Supreme Court in Washington, D.C., on Dec. 1. Photo: Olivier Douliery/AFP via Getty Images

The Supreme Court on Wednesday seemed likely to weaken abortion rights and perhaps to let states ban the procedure altogether.

The intrigue: The court seemed likely to throw out the framework established in Roe v. Wade, but it wasn't clear whether a majority of the justices were inclined to overturn the court's precedents entirely.