WASHINGTON (Reuters) – With a full three months of responding to a global pandemic under their belt, U.S. Federal Reserve officials have united around one point: lasting progress on the economic front will be dictated by success in containing the spread of the coronavirus.
FILE PHOTO: The U.S. Federal Reserve building is set against a blue sky amid the coronavirus pandemic in Washington, U.S., May 1, 2020. REUTERS/Kevin Lamarque/File Photo
But agreement beyond that may be elusive as Fed policymakers meet this week to balance fresh signs the United States may be over the worst of the economic fallout from the pandemic against evidence the virus is not yet under control.
A surprise gain of more than 2.5 million U.S. jobs last month will factor into their debate, as will any hint the surge in employment and other activity more broadly is accompanied by more transmission of the novel coronavirus.
Where they end up could shape decisions about whether to expand or create new emergency programs in anticipation of a more extended economic crisis, or about how to best support companies and households if in fact the pandemic is easing.
The U.S. central bank has ongoing debates on each front, both about the long-run commitments it might make to anchor interest rates at a low level for the recovery, and the continued hunt, as Fed Chair Jerome Powell put it last week, for companies with substantial numbers of employees that have not been covered in any of the crisis programs launched so far.
The stunning May payrolls data released by the Labor Department on Friday could temper some of the urgency that has accompanied Fed meetings since March. [nL1N2DH2GS]
After having cut interest rates to near zero and launched a bevy of credit programs in a frenzy of emergency meetings in March, no ma