Fed’s Mester calls on Congress for pandemic recovery help, says ‘downside risks’ to the economy are on the rise

Finance news

Cleveland Federal Reserve Bank President Loretta Mester poses during an interview on the sidelines of the American Economic Association’s annual meeting in San Diego, California, January 3, 2020.

Ann Saphir | Reuters

Cleveland Federal President Loretta Mester called Wednesday for more help from Congress and said the central bank stands at the ready to provide whatever resources it can to help an economy at risk from rising coronavirus cases.

A spike in cases among hotspots across the U.S. has increased dangers to an economy that slumped nearly 33% in the second quarter on an annualized basis. 

However, Mester said in a speech to the Liberal Arts Macroeconomic Conference that the threat posed from the virus “does not mean we are helpless.”

“The actions we take can help control the virus and thereby change the impact of the virus on the economy,” said Mester, a voting member of the policymaking Federal Open market Committee.

 Like her fellow Fed officials, she called for more fiscal help from Congress, which is negotiating the next phase of rescue funding with the White House. 

“It will take continued fiscal and monetary policy support to limit lasting damage to the economy and achieve a sustainable recovery,” she said. Mester added that “it is also clear that more fiscal support is needed to provide a bridge for households, small businesses, and state and local municipalities that have borne the brunt of the economic shutdown until the recovery is sustainably in place.”

Recent developments with the virus have “raised the downside risks” to the economic outlook and are “a stark reminder that there are several different scenarios that could play out,” she said.

Mester noted the myriad programs the Fed has put into place during the pandemic; it also has cut its policy rate to near zero, where it last was in 2015. She said the Fed is “committed to using all of its policy tools” to help the recovery along.