Cleveland Fed president says ‘downside’ economic risks rising, calls for more aid

Loretta Mester, president of the Federal Reserve Bank of Cleveland, asked for more assistance from Congress on Wednesday as negotiators seek to complete a deal on a new coronavirus relief package.

Lawmakers are trying to reach a deal on adding to state unemployment benefits and renewing a federal moratorium on certain evictions that expired last month.

“The actions we take can help control the virus and thereby change the impact of the virus on the economy,” Mester said at the Liberal Arts Macroeconomic Conference, CNBC reported. “It will take continued fiscal and monetary policy support to limit lasting damage to the economy and achieve a sustainable recovery.”

She added, “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.”

Democrats in the House approved a $3.4 trillion measure, but Republicans want a package more in the range of $1 trillion. Lawmakers are looking at distributing another round of $1,200 stimulus checks as part of the package.  

Congress in March approved a $600 increase in unemployment benefits, and lawmakers disagree over whether to renew those benefits, which expired at the end of July.

The Fed has made several policy moves during the pandemic in an effort to help the American economy, such as lowering interest rates to zero percent. Mester, however, noted that the recent surge of cases across the country had “raised the downside risks” to the economic outlook, but that the Fed has stayed “committed to using all of its policy tools” during the rough financial times.