(Bloomberg) -- Federal Reserve Chair Jerome Powell urged Congress not to pull back too quickly on federal relief to households and small businesses amid increasing debate over whether to extend temporary programs that were put in place to shield them from the pandemic.
“I would think that it would be a concern if Congress were to pull back from the support that it’s providing too quickly,” Powell said Wednesday while answering questions before the House Financial Services Committee.
“I do think it would be appropriate to think about continuing support for people who are newly out of work and for smaller businesses who are struggling,” Powell said. “The economy is just now beginning to recover. It’s a critical phase and I think that support would be well-placed at this time.”
Powell was answering a question from Representative Maxine Waters, the California Democrat who chairs the committee. Representative Patrick McHenry, the North Carolina Republican who is the party’s ranking member on the committee, quickly followed up by warning the Fed chair to stay in his lane.
“Monetary and fiscal policy are two very different things. I would urge you and the leadership of the Fed to stick to monetary policy,” McHenry said.
“Your words of encouragement that we have our responsibilities on the fiscal side of the house I think are well-noted, and what you are telling us about the employment marketplace on a going-forward basis, I think, is informative for our policy-making,” he said. “And so, thank you for your statements there, that additional congressional action is required.”
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Lawmakers are debating whether to renew extra aid that it approved for the millions of Americans who lost their jobs as businesses shut to stem the spread of the virus. Extra unemployment insurance payments of $600 a week are due to expire on July 31.
A growing number of Republicans want to hold back on further stimulus to give the roughly $3 trillion that Congress already allocated time to work its way through the economy.
(Updates with details on stimulus debate starting in seventh paragraph.)
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