Federal Reserve Chairman Jerome Powell appeared before the U.S. Committee on Banking, Housing, and Urban Affairs on Tuesday, detailing the measures  the Fed has taken to combat the COVID-19 pandemic.
“It has only been four months since the last Humphrey-Hawkins hearing, but we are seeing a significantly different economy today; one that has been racked by the physical and economic impact of the COVID-19 pandemic and ensuing shutdowns,” said Sen. Mike Crapo, Chair of the U.S. Committee on Banking, Housing, and Urban Affairs.
Crap added recent actions by the Fed, included purchasing more than $2 trillion in Treasury and mortgage-backed securities, which has caused the Fed’s balance sheet to grow to more than $7 trillion.
Powell said around 20 million net jobs have been lost since February, and the reported unemployment rate has risen about 10 percentage points to 13.3%. He added that low-income households have experienced the biggest drop in employment, while employment declines of African Americans, Hispanics, and women have been greater than that of other groups.
“If not contained and reversed, the downturn could further widen gaps in economic well-being that the long expansion had made some progress in closing,” Powell said.
While recent events point toward stabilization in some areas, Powell noted the Fed lowered interest rates to nearly 0%—between 0–.25%.
“We expect to maintain interest rates at this level until we are confident that the economy has weathered recent events and is on track to achieve our maximum-employment and price-stability goals,” Powell said.
He added the purchase of mortgage-backed securities is “vital to the flow of credit in the economy.”
“As market functioning has improved since the strains experienced in March, we have gradually reduced the pace of these purchases. To sustain smooth market functioning and thereby foster the effective transmission of monetary policy to broader financial conditions, we will increase our holdings of Treasury securities and agency mortgage-backed securities over the coming months at least at the current pace,” he said.
First American Financials’ Deputy Chief Economist Odeta Kushi said following the June meeting of the Federal Open Market Committee  that the Fed is following through on their commitment to "do anything it takes for as long as it takes" to mitigate the impacts of COVID-19, including policies that impact the mortgage markets.
“The Fed is a gigantic ready-buyer in the secondary market, generating demand that increases MBS prices and lowers yield for investors—this results in lower mortgage rates," she said.
George Ratiu, realtor.com's Senior Economist, echoed Kushi's statement, saying the Federal Reserve "remains committed" to providing liquidity to the financial system and the economy.