By Nick Timiraos 

Federal Reserve Chairman Jerome Powell said the central bank was aggressively using lending powers reserved for emergencies to prevent a temporary and indefinite shutdown of commerce from leading to a collapse of financial markets and the economy.

"We will continue to use these powers forcefully, proactively, and aggressively until we are confident that we are solidly on the road to recovery," Mr. Powell said in remarks at an online forum hosted Thursday by the Brookings Institution in Washington.

But he underscored the limits of those powers, effectively calling on Congress and the Trump administration to take additional action to prevent the halt in economic activity aimed at slowing the spread of the coronavirus from hobbling businesses, states and cities dealing with unprecedented revenue losses.

Mr. Powell also said the U.S. needed a national plan for reopening the economy based on the best analysis from health officials. "We all want it to happen as quickly as possible. We all want to avoid a false start, " he said.

Congress last month approved a $2 trillion economic rescue package that included $454 billion in funding from the Treasury to backstop losses in Fed lending programs.

"I would stress that these are lending powers, not spending powers" that the Fed is using, said Mr. Powell. While many borrowers will benefit from the Fed's emergency loans, he said, "there will also be entities of various kinds that need direct fiscal support rather than a loan they would struggle to repay."

Mr. Powell punctuated his call for additional fiscal support by highlighting how severe economic burdens are falling on low-income workers and other vulnerable segments of society.

"All of us are affected, but the burdens are falling most heavily on those least able to carry them," he said. "As a society, we should do everything we can to provide relief to those who are suffering for the public good."

The task of delivering financial support "directly to those most affected falls to elected officials, who use their powers of taxation and spending to make decisions about where we, as a society, should direct our collective resources," Mr. Powell said. He closed his remarks by thanking "the millions on the front lines" in health care, sanitation, grocery, warehouse and delivery jobs.

Mr. Powell spoke shortly after the Fed announced a new round of $2.3 trillion in lending programs to companies of all sizes and to cities and states, taking the Fed well past its traditional comfort zone by plunging into credit and fiscal-policy decisions it has long left to Congress and the executive branch.

Mr. Powell said the Fed would put its emergency tools away "when the economy is well on its way back to recovery."

The central bank last month cut its short-term benchmark rate to zero and it has purchased more than $1 trillion in Treasury and mortgage securities in a few weeks to stabilize core pillars of U.S. and global financial markets.

A record 7.5 million Americans were receiving unemployment benefits at the end of March, the Labor Department reported Thursday. Another 6.6 million had submitted claims in the week ended April 4

"None of us has the luxury of choosing our challenges," Mr. Powell said. "Fate and history provide them for us. Our job is to meet the tests we are presented."

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

(END) Dow Jones Newswires

April 09, 2020 11:47 ET (15:47 GMT)

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