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Fed officials cited risks if Congress fails to pass more aid

WASHINGTON — Federal Reserve officials expressed concern at their most-recent meeting that the U.S. economy recovery could falter if Congress failed to approve another round of pandemic relief.

The Fed on Wednesday released minutes of its September meeting, showing that officials believed the economy was growing faster than expected. They based their forecasts of a steady recovery on expectations Democrats and Republicans would provide further economic aid, including expanded unemployment benefits and help for small businesses.

The minutes said that “most forecasters were assuming that an additional pandemic-related fiscal package would be approved this year, and noted that, absent a new package, growth could decelerate at a faster-than-expected pace in the fourth quarter.”

The prospects for approval of a new package being passed before the Nov. 3 elections, however, have diminished with President Donald Trump’s decision to cut off negotiations with Democrats. Trump has instead proposed that Democrats approve individual rescue items, such as money for ailing airlines and another round of $1,200 stimulus checks for most adults.

Federal Reserve Chairman Jerome Powell warned in a speech Tuesday of potentially tragic consequences if Congress and the White House do not provide further assistance, saying “the expansion is far from complete.”

The minutes covered the Fed’s Sept. 15-16 meeting in which officials left their key policy rate unchanged at near zero and signaled they expect to keep rates ultra-low at least through 2023.

The Fed’s statement incorporated a policy change the central bank announced in August in which it will allow inflation to rise above its 2% target for a period of time to make up for the extended period over the past decade that annual inflation has been below the 2% target.

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