"We have seen some signs in recent weeks that the increase in virus cases and the renewed measures to control it are starting to weigh on economic activity," Powell said in a news conference following release of the U.S. central bank's latest policy statement.
The United States "has entered a new phase in containing the virus, which is essential to protect both our health and our economy."
Powell's comments, made via videoconference, confirmed what many economists and other analysts have maintained in recent weeks as coronavirus infections exploded in a number of southern and southwestern states, dimming hopes for a quick economic rebound.
JEROME POWELL: At the Federal Reserve, we remain committed to using our tools to do what we can and for as long as this takes to provide some relief and stability, to ensure that the recovery will be as strong as possible, and to limit lasting damage to the economy.
In recent months, economic activity picked up as the economy began to reopen. Many businesses opened their doors, factories restarted production, and more people left their homes to engage in various activities. As a result, household spending looks to have recovered about half of its earlier decline, although spending for services such as air travel and hotels has shown much less of a pickup.
The recovery in household spending also likely owes to federal stimulus payments and expanded unemployment benefits which provided substantial and timely support to household incomes.
The unemployment rate declined in May and June but, at 11.1%, remains far above its level before the outbreak and greater than the peak during the Global Financial Crisis.
A full recovery is unlikely until people are confident that it's safe to re-engage in a broad range of activities. The path forward will also depend on policy actions taken at all levels of government to provide relief and to support the recovery for as long as needed.
The Federal Reserve's response to this crisis has been guided by our mandate to promote maximum employment and stable prices for the American people, along with our responsibilities to promote the stability of the financial system. We are committed to using our full range of tools to support the economy in this challenging time. We have held our policy rate near zero since mid-March and have stated that we will keep it there until we are confident that the economy has weathered recent events and is on track to achieve our maximum-employment and price-stability goals.
The fiscal-policy actions that have been taken thus far have made a critical difference to families, businesses, and communities across the country. Even so, the current economic downturn is the most severe in our lifetimes. It will take a while to get back to the levels of economic activity and employment that prevailed at the beginning of the year, and it will take continued support from both monetary and fiscal policy to achieve that.