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Federal Reserve Chairman Jerome Powell testified before a House committee in February.

Photo: mandel ngan/Agence France-Presse/Getty Images

Federal Reserve Chairman Jerome Powell said the increased spread of the coronavirus posed an important risk to the economy in the months ahead and said it was too soon to say how a potential vaccine would change the outlook.

“With the virus now spreading at a fast rate, the next few months may be very challenging,” Mr. Powell said during a virtual question-and-answer session Tuesday. “We’ve got a long way to go.”

While recent news about successful vaccine trials was “certainly good news, particularly in the medium term, in the near term there are significant challenges and uncertainties,” Mr. Powell added. “Even in the best case, widespread vaccination is months into the future.”

The spread of the coronavirus is ‘the near-term risk that we’re most focused on.’

Fed Chairman Jerome Powell

Promising reports about the efficacy of new vaccines have propelled stocks to records this week. But the pace of improvement in the labor market has slowed in recent months and a report on October sales at U.S. retailers showed growth posted the smallest monthly rise since May, when spending rebounded from sharp declines in the initial phase of the pandemic.

The spread of the coronavirus is “the near-term risk that we’re most focused on,” Mr. Powell said. As case counts climb and hospitalizations rise, more states are beginning to impose restrictions on commercial activity. “The concern is that people will lose confidence in efforts to control the pandemic, and…we’re seeing signs of that already,” he said.

Separately, Mr. Powell obliquely addressed the fate of a suite of emergency lending programs established jointly with the Treasury Department after the pandemic convulsed financial markets this spring. The Treasury hasn’t indicated whether it supports renewing the programs, which are set to expire on Dec. 31.

“The Fed will be strongly committed to using all of our tools to support the economy for as long as it takes until the job is well and truly done,” Mr. Powell said. He hinted it would be premature to wind down the lending programs. “When the right time comes, and I don’t think that time is yet or very soon, we will put those tools away,” he said.

From the Archives

Speaking virtually at the National Association for Business Economics annual meeting, Fed Chairman Jerome Powell warned of potentially “tragic” risks if Congress and the White House do too little to support the recovery. Photo: Toni L. Sandys/Press Pool (Originally published Oct. 6, 2020)

Fed officials cut their benchmark interest rate to near zero in March when the pandemic arrived, and the central bank has purchased trillions of dollars of Treasurys and other government-guaranteed assets to keep markets from seizing up. The Fed is currently buying $120 billion in assets a month.

Mr. Powell said Tuesday he expected the economy would require more support from the Fed and from fiscal policy makers in Congress and the White House. The Fed’s next policy meeting is scheduled for Dec. 15-16.

The Fed leader also warned about the dangers that large institutions face from eroding faith and trust from the public. Mr. Powell said the Fed had “greatly increased our interactions” with members of Congress to promote transparency and accountability.

“If you’re not doing those things and aggressively seeking transparency and accountability, you’re courting trouble in this world, where surveys show that generally you’re losing faith,” he said.

In response to a question about the potential for the U.S. dollar to lose its status someday as the reserve currency, Mr. Powell pointed to the factors such as deep capital markets and strong and robust institutions as reasons why the U.S. dollar has enjoyed such status. “We have to be those things to continue to warrant that status,” he said.

Write to Nick Timiraos at nick.timiraos@wsj.com

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