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Federal Reserve Chair Jerome Powell emphasized the damage the economy has suffered due to the pandemic and stressed that there was still a long way to go to a full recovery.

“The economic recovery remains uneven and far from complete, and the path ahead is highly uncertain,” Powell said in testimony to the Senate Banking Committee.

Powell said that Fed will continue to support the economy with ultralow interest rates and large-scale bond purchases until “substantial further progress has been made.” He added that a full recovery “is likely to take some time.”

Several times in his testimony, Powell mentioned that the labor market was still 10 million jobs smaller than it was prepandemic. And he dismissed inflation risk, saying a sustained rise in prices above the Fed’s target is unlikely.

Stocks rallied on Powell’s testimony.  By emphasizing the weakness of the economy and saying inflation remains soft, Powell out to rest fears of a policy shift toward raising rates following this month’s rise in bond yields.

Some prominent economists have warned that the Biden administration’s spending plans risk overheating the economy. Powell declined to state whether he is in favor of the Biden administration’s $1.9 trillion spending bill but did say some fiscal expansion would help the recovery.

“I have consistently not taken a position on this bill,” Powell said.

“So your opinion is that if we don’t pass the bill, you’re cool with that?” asked Senator John Kennedy (R-La.).

“That would be taking a position which is what I said I am not doing,” Powell said.

Powell’s focus on the weakness of the economy is at odds with the increasing optimism among many analysts that the economy will grow rapidly later this year. Most economists say they think the Fed’s continued low rates, further government financial aid, and progress in combating the viral pandemic could create a mini-economic boom as soon as this summer. Goldman Sachs thinks the economy will grow at an 11 percent rate in the second quarter and 6.8 percent for the full year.

Powell acknowledged the potential for a healthier economy. But he stressed the personal hardships caused by the pandemic, especially for unemployed Americans.

“As with overall economic activity, the pace of improvement in the labor market has slowed,” Powell said. “Although there has been much progress in the labor market since the spring, millions of Americans remain out of work.”

Powell’s focus on the economy’s challenges reflects his reluctance to send any signal that the Fed is considering pulling back on its efforts to boost economic growth and hiring. The Fed cut its benchmark short-term interest rate to nearly zero last March in response to the pandemic recession. It is also purchasing $120 billion a month in bonds in an effort to hold down longer-term rates.

—The Associated Press contributed to this report.

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Asian Shares Rise on Hopes for US Stimulus Package

By YURI KAGEYAMA, AP Business Writer

TOKYO (AP) — Asian shares rose Monday on hopes for President Joe Biden's stimulus package and bargain-hunting after sell offs last week.

Japan's benchmark Nikkei 225 surged 2.2% in morning trading to 29,587.82. Australia's S&P/ASX 200 jumped 1.5% to 6,774.00.

Hong Kong's Hang Seng advanced 0.9% to 29,253.72, while the Shanghai Composite rose 0.6% to 3,529.98 despite a survey showing slightly weaker manufacturing indicators for the month of February.

South Korean markets were closed for a national holiday. But the government reported that exports rose 9.5% in February from a year earlier and imports jumped nearly 14%, in signs the economy is picking up momentum.

A manufacturing survey for Japan showed an expansion in February for the first time since April 2019. The au Jibun purchasing managers index reading of 51.4 — on a scale of 1-100, where 50 and above show expansion — was a sharp improvement from the 49.8 level registered in January.

The survey showed improvements in many areas including higher sales and orders and higher exports, reflecting improved demand in overseas markets, especially China.

Asia's export-reliant economies are counting on a healthy American economy to boost trade, which has tended to stagnate during the pandemic. As the region's recovery begins to take off, vaccine rollouts are also gradually getting started in most Asian nations.

Worries about the economy, as well as about COVID-19, are still relatively widespread in Japan, which is seeing yet another wave of coronavirus cases. Some urban areas, like Osaka, have lifted measures to help prevent the spread of infections, but the Tokyo area remains under a “state of emergency,” focused on having restaurants, bars and other businesses close at 8 p.m. Japan has never had a lockdown.

The U.S. House of Representatives approved Biden’s $1.9 trillion pandemic relief bill on Friday and it now goes to the Senate for approval. The bill infuses cash across the struggling economy to individuals, businesses, schools, states and cities battered by COVID-19.

The U.S. stimulus bill would include yet another round of one-time payments to most Americans, including an expansion of other refundable tax credits like the child tax credit, and additional aid to state and local governments to combat the pandemic.

“It is still fundamentally good news that the sell-offs' economic underpinnings — increasing mobility, inflation, and US stimulus — are still intact, with global vaccinations rolling out faster than expected,” said Stephen Innes, chief global market strategist at Axi.

Wall Street ended last week mostly lower, pushing the S&P 500 to its second straight weekly loss. The S&P 500 index fell 0.5% to 3,811.15. Despite a two-week slide, the index managed a 2.6% gain for February after a 1.1% loss in January.

The Dow Jones Industrial Average dropped 1.5% to 30,932.37. The Nasdaq gained 0.6% to 13,192.34. The index still posted its biggest weekly loss since October. The Russell 2000 index of smaller companies eked out a small gain, adding less than 0.1%, to 2,201.05.

In energy trading, benchmark U.S. crude gained $1.07 to $62.57 a barrel. It lost $2.03 on Friday to $61.50 per barrel. Brent crude, the international standard, rose $1.41 to $65.83 a barrel.

In currency trading, the U.S. dollar rose to 106.63 Japanese yen from 106.56 yen late Friday. The euro cost $1.2086, up from $1.2074.

Copyright 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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