Fed may need to act if coronavirus takes toll on US economy, but not yet, say central bank officials

NEW YORK (REUTERS) – Philadelphia Federal Reserve Bank President Patrick Harker said on Monday (Feb 10) that the US central bank is monitoring the impact of the coronavirus but added there is not much officials can do at the moment.

The Fed’s main tool of reducing interest rates by a quarter of a percentage point is unlikely to offer much relief to companies whose supply chains were interrupted because of shutdowns related to the virus, Harker said during a panel at the University of Delaware.

But, he added, “If the situation gets significantly worse and we start to see significant impact on the US economy, then we have to think about accommodating. But I don’t think we’re at that point right now.”

San Francisco Fed President Mary Daly also said she was paying attention to the economic risks of the coronavirus outbreak in China.

Daly told reporters on Monday that the human impact of the outbreak should not be ignored, but emphasized that the negative effects of the coronavirus on the economy could be “transitory.” She said disruptions on supply chains and oil prices should return to normal if the market response to similar episodes with previous health crises.

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