Federal Reserve Chairman Jerome Powell warned Friday the deadly coronavirus outbreak poses an evolving threat to the economy and vowed that policymakers at the U.S. central bank take action if necessary to sustain the 11-year expansion.
"The fundamentals of the U.S. economy remain strong," Powell said in a mid-day statement. "However, the coronavirus poses evolving risks to economic activity. The Federal Reserve is closely monitoring developments and their implications for the economic outlook. We will use our tools and act as appropriate to support the economy."
Powell's statement comes amid an extended global meltdown that has major U.S. averages on track for their steepest weekly decline since the financial crisis in 2008.
Markets have been clamoring for the Fed to ease the benchmark federal funds rate, which is currently set between a range of 1.5 percent and 1.75 percent.
The CME’s FedWatch Tool, which analyzes the probability of rate moves for upcoming Fed meetings, is currently predicting a 100 percent chance of a rate cut in March, with almost 40 percent of traders expecting a 50-basis point cut. Sixty percent are forecasting a more modest 25-basis point cut.
During an interview on FOX Business earlier in the day, Dallas Fed President Robert Kaplan noted that economic fallout from the virus could spill over into the U.S.
The virus, which causes a disease called COVID-19, has killed close to 3,000 people, with more than 83,000 cases reported worldwide, mostly in China. So far, there have been a total of 60 confirmed cases of coronavirus in the U.S. That figure includes individuals who have been repatriated to the country.
It has forced China, the world's second-largest economy, to all but halt its production of consumer goods like phones, clothing and automobiles and institute mass quarantines in some cities and place severe restrictions on an estimated 780 million people.
"The thing that companies are trying to assess, and what we're trying to assess, is what will be the demand effect," Kaplan said. "We already know that the travel industry is affected in the United States, we know the oil industry is affected already. That's the part that's uncertain, and we're going to have to continue to monitor this."