The fate of the US economy depends on the course of the pandemic and the Covid-19 vaccine rollout.
But the outlook is nonetheless "highly uncertain," Federal Reserve Chair Jerome Powell said last night.
"A resurgence in recent months of Covid-19 cases, hospitalisations and deaths is causing great hardship for millions of Americans and weighing on economic activity and job creation," he said.
He said government spending programmes have helped support the economy, but the US needs to recover at least nine million jobs to reach the goal of full employment.
"Overall economic activity remains below its level before the pandemic, and the path ahead remains highly uncertain," Powell told reporters.
He spoke after the central bank's policy-setting Federal Open Market Committee held its first meeting of 2021 and pledged to keep borrowing rates low until employment has recovered.
It was the first meeting under the presidency of Joe Biden, who took office last week and said defeating the Covid-19 pandemic and pushing through a $1.9 trillion economic rescue plan are his top priorities.
"Support from fiscal policy will help households and businesses weather the downturn as well as limit lasting damage to the economy that could impede the recovery," the Fed chief said.
He also said he was "absolutely sure" he would be able to work well with newly-installed US Treasury Secretary Janet Yellen, who was his predecessor as Fed chair and will lead the charge in pushing Biden's stimulus plan through Congress.
After the coronavirus pandemic derailed the world's largest economy, unemployment surged from a near record low of 3.4% to nearly 15%, before ending last year at 6.7%.
However, Powell said the pandemic drove huge numbers of people out of the workforce, which means "the real unemployment rate is close to 10%."
As the economy grapples with the world's worst coronavirus outbreak, optimism about vaccines has raised hopes that activity can return to normal soon.
But there also have been some setbacks in vaccine distribution and supply, and the FOMC said the course of the recovery will depend "significantly" on the virus and those treatments.
Powell, who said he has received the first of two shots for his Covid-19 vaccine, cautioned that it will be "a struggle" to get enough people injected to achieve herd immunity.
After the US, like other countries, saw a resurgence of infections late last year, the FOMC noted that the recovery had "moderated in recent months, with weakness concentrated in the sectors most adversely affected by the pandemic."
The Fed again pledged to keep the benchmark lending rate low until the economy achieves "full employment," in keeping with its new policy stance.
Even before the pandemic struck, US inflation was muted and since then has fallen far below the Fed's 2% target.
That prompted the bank to shift its focus to helping the labour market recover, while accepting higher inflation for a while once the economy begins to grow more strongly.
Powell acknowledged that some prices might spike as sectors are able to return to normal, but those transitory effects would not be overly concerning.
The Fed also committed to keeping its asset purchases at the pace of at least $120 billion a month, and Powell said it is far too soon to even discuss the possibility of tapering the bond buying programme.