In the beginning of a busy week of Fedspeak, Philadelphia Fed President Patrick Harker and San Francisco Fed President Mary Daly made remarks noting that they were paying attention to the economic risks of the coronavirus outbreak in China.
“My own view right now is that we should hold steady for a while and watch how developments and the data unfold before taking any more action,” Harker said in a speech in Delaware on Monday. Harker is a voting member of this year’s Federal Open Market Committee.
Harker said his outlook for the U.S. economy is still “generally positive,” echoing comments from Daly in which she described the economy as being in a “good place.”
Daly told reporters 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.
“For now I’m watching the coronavirus carefully to see if it has any longer term effects on the economy or deeper effects than we’ve penciled in right now,” Daly said. “But to date, none of those have materialized.”
Daly is not a voting member of this year’s FOMC, but remains an active participant in policy debates as other non-voting Fed officials are.
Fed policymakers have said in the past that they find the interest rates (currently between 1.5% and 1.75%) at an “appropriate” level, barring any “material reassessment” of the outlook. But comments from Daly and Harker appear to shrug off coronavirus-related concerns as having any material effect.
Assuming no other changes, Daly said she was comfortable with rates where they are “for the foreseeable future.”
Fed Chairman Jerome Powell will have the opportunity to provide more color on the economic outlook in testimony on Capitol Hill. Powell is scheduled to testify to the House Financial Services Committee at 10 a.m. ET on Tuesday and then again to the Senate Banking Committee at 10 a.m. ET on Wednesday.
The Fed’s next policy-setting meeting will take place March 17-18.
Brian Cheung is a reporter covering the banking industry and the intersection of finance and policy for Yahoo Finance. You can follow him on Twitter @bcheungz.