Fed plans for ‘the worst’ as it waits for Congress to act

The Federal Reserve took little action at its meeting this week, but sent plenty of dovish signals to investors — highlighting its worries about the impact of coronavirus on a US recovery, its hopes that Congress will renew fiscal stimulus, and its willingness to add monetary support.

“We’ve got to hope for the best and plan for the worst,” Jay Powell, the chairman of the US central bank, said at his press conference on Wednesday, after a two-day gathering of the Federal Open Market Committee.

“We’re in this until we’re well through it,” he said. “The picture is, you have the lockdown, then you have the reopening, but there’s probably going to be a long tail where a large number of people are going to be struggling to get back to work.”

Mr Powell had been cautious about the prospects of a speedy rebound from the Covid-19 crisis, but his anxieties and those of other Fed officials appeared to have grown in the past few weeks, underpinning their willingness to provide as much of their own stimulus as they can.

“The Fed is committed to keeping its foot on the gas. It has floored it and is still flooring it . . . and…

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