Powell, Fed Chair, Speech Level on New Coronavirus Concerns Draws Attention

High Possibility of Mention in US Congressional Testimony on 11-12th
Fed Assesses 'New Threats to Economic Outlook'

[Image source=Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] The U.S. Federal Reserve (Fed) has assessed that the spread of the novel coronavirus infection originating from China (Wuhan pneumonia) has "emerged as a new risk to the economic outlook." Fed Chair Jerome Powell referred to the novel coronavirus as "uncertainty still exists" shortly after the Federal Open Market Committee (FOMC) meeting at the end of last month, and within ten days, the Fed regarded it as a risk in its report. Chair Powell is scheduled to appear before the U.S. Congress on the 11th and 12th to present evaluations and forecasts regarding the global economy.

In the 'Monetary Policy Report' recently submitted to the U.S. Congress, the Fed mentioned, "Amid recent stabilization of economic growth and easing financial conditions, the impact of China's novel coronavirus has become a new risk to the economic outlook." Specifically, regarding China, where the novel coronavirus emerged, the Fed pointed out that "it could cause disruptions in a situation where gradual growth is expected."

Although the Fed had maintained a cautious stance by stating it would "closely monitor" the impact of the novel coronavirus outbreak on the global economy, this report expressed concerns more actively. The Fed added that since the latter half of last month, investors have started to worry more about Treasury bonds, and yields have been falling.

In particular, Chair Powell is scheduled to appear before Congress this week, making it highly likely that he will provide more specific assessments of the impact of the novel coronavirus on the U.S. and global economies. Bloomberg News predicted that although the Fed did not specify the extent of the novel coronavirus's impact in the semiannual report, Chair Powell might present expected figures during the Q&A session with lawmakers.

Many economic research institutions have already forecasted that the novel coronavirus will have a significant adverse effect on both the Chinese and global economies. Oxford Economics in the UK expects China's economic growth rate to fall from 6.1% last year to 5.6% this year, with the global economic growth rate remaining at 2.3%, which is 0.2 percentage points lower.

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