Fed’s Kashkari Says If Coronavirus Hits US Economy, Fed May Step In

Daniel Fowler
February 13, 2020

Shelton is set to appear alongside fellow Fed nominee Christopher Waller, who now serves as the executive vice president and director of research at the Federal Reserve Bank of St. Louis.

Kashkari's remarks about the central bank monitoring the viral outbreak echo statements made by Federal Reserve Chairman Jerome Powell, who testified on monetary policy at a House Financial Services Committee hearing in Washington on Tuesday.

But the Fed doesn't see any need to ease monetary policy for now. He also noted the time he had spent with members of the community discussing how Fed policy affects them, adding that the input he received "affected how I thought about policy and its consequences".

Sen. Mark Warner, Democrat from Virginia, said that many other government institutions are "under assault" from the Trump administration, citing White House attacks on intelligence agencies and turmoil at the Justice Department over the prosecution of Trump's associate Roger Stone.

Trump tweeted Tuesday that the Dow was falling as Powell spoke "as usual", and said interest rates in the USA were too high.

The Federal Reserve will be forced to use large-scale asset purchases "aggressively" in a downturn, Chairman Jerome Powell told USA lawmakers, as central bankers confront the dilemma of persistently low interest rates.

Coronavirus death toll leaps by 242 in China's Hubei province
As new diagnostic methods are employed, the daily number of deaths in the province more than doubled, according to Liberty Times . Officials explained the uptick Thursday by saying they had reclassified how they were diagnosing and counting cases of COVID-19.

"The real question for the Fed is: What is the likely effect on the USA economy?"

The epidemic would likely have some effect on the US economy, he said, but it was too early to tell if it would be significant enough to merit a response from the Fed. -China trade war and slower overseas growth.

"I think in the President's ideal world, he gets rates pushed down even lower, gets some good economic news towards the end of summer, because he really wants a strong economy and strong stock market - not necessarily now, he needs it in September, October as people are going to the polls", Peter Tchir, head of macro strategy at Academy Securities, told Yahoo Finance during The Ticker Thursday.

Those developments, he said, mean that the benefits of a robust job market are becoming more widely shared, with employment gains broad-based across racial and ethnic groups and levels of education. Though the just-released presidential budget projects a reduction over the next 10 years, it assumes 3 percent economic growth for years to come.

Powel said the Fed's current policy stance will likely remain appropriate, as long as the United States economy stays "broadly consistent" with the Fed's outlook. The interest rate is now settling in a historically low range from 1.5% to 1.75%. Chairman Powell said he expected it to move closer to the target over the next few months.

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