China coronavirus outbreak poses risk to Federal Reserve’s economic outlook
- Potential fallout from China coronavirus outbreak takes centre stage in Fed Chair’s press conference after policy meeting
- When China’s economy slows down, ‘we do feel that – not as much though as countries that are near China,’ Powell says
The outbreak of a new virus that originated in the central-Chinese city of Wuhan is likely to slow China’s economic growth in the near term and could hurt its trading partners around the world.
The potential effects of the spread of the coronavirus, which has sickened more than 7,000, mostly in China, and killed 170 since its detection early last month, took centre stage in Federal Reserve Chair Jerome Powell’s news conference on Wednesday, following the central bank’s widely expected decision to keep interest rates unchanged.
The Fed is “very carefully monitoring the situation,” Powell told reporters. While it is “too early to say” what the extent of the impact on the US will be, he added that it is “a significant thing which will have some effects on the Chinese economy, at least in the short term.”
A Chinese government economist earlier on Wednesday projected the viral outbreak would cut China’s first-quarter growth by one percentage point to 5 per cent or lower.
Powell also acknowledged the risks, including to the US economy, from any slowdown in the world’s second-biggest economy.
“China’s economy is very important in the global economy now, and when China’s economy slows down we do feel that – not as much though as countries that are near China, or that trade more actively with China, like some of the Western European countries,” Powell said.
China has imposed travel restrictions and shut businesses and schools in an attempt to contain the outbreak, but it has not quelled rising concern among companies and governments across the world, some of whom are taking swift action.