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Powell Testimony in Focus Amid Growing Virus Impact: Eco Week

David Goodman
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Powell Testimony in Focus Amid Growing Virus Impact: Eco Week

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Federal Reserve policy and personnel will be in the spotlight this week as the global economy continues its efforts to grapple with the impact of coronavirus outbreak.

After Friday’s strong payrolls numbers, Fed Chair Jerome Powell will deliver his semi-annual testimony before Congress, with the economic cost of the rapid spread of the virus likely to be one of the issues he’s questioned on. The week will also see a host of other Fed speakers, and a hearing on the nominations of Judy Shelton and Christopher Waller for two vacancies on the central bank’s board.

What Bloomberg’s Economists Say...

“Despite the stronger-than-expected January jobs report, economic growth prospects are looking shakier in the first half of the year. Potential economic disruptions from the coronavirus and a lengthier stoppage of Boeing production both hold the capacity to move the needle on top-line growth -- and the impact looks likely to extend into the second quarter.”

--Carl Riccadonna, Yelena Shulyatyeva, Andrew Husby and Eliza Winger

Elsewhere, Germany and the U.K. will report growth numbers, while central banks in Sweden, New Zealand and Mexico are among those due to set rates.

Here’s what happened last week and below is our weekly wrap of what else is going on in the world economy this week.

U.S. and Canada

Aside from Powell’s testimony, which starts on Tuesday, around half a dozen Fed officials are due to make public comments, ending a relatively quiet period since the January rate decision. On the data front, a retail sales report will give another look at the health of the U.S. consumer, while the nation also releases its latest inflation numbers.

For more, read Bloomberg Economics full Week Ahead for the U.S.

Europe, Middle East and Africa

The European Commission will update its economic forecasts on Thursday, offering its take on the recent stabilization in the euro area’s economy. However, any brighter sentiment may be somewhat tempered by the fallout from the coronavirus.

That’s a threat already highlighted by European Central Bank President Christine Lagarde, who speaks at the European Parliament in Strasbourg on Tuesday. There’s also data on euro-area industrial production and U.K. GDP, with the latter forecast to show fourth-quarter stagnation.

The week could end on a down note when German publishes GDP data. After dire industrial figures on Friday, there’s a risk that Europe’s largest economy suffered a second contraction in a year.

What Bloomberg’s Economists Say...

“Two of Europe’s biggest economies publish fourth-quarter growth figures -- Germany probably contracted after another dire industrial performance while the U.K. looks set to flatline. Both economies should do a little better in 2020.”

South African unemployment data on Tuesday will probably show joblessness remains near the highest in at least 11 years, adding pressure on President Cyril Ramaphosa to announce growth-boosting reforms in his state-of-the-nation address on Thursday.

In Israel, the latest inflation data comes out on Friday, with the central bank looking for movement upward toward the bottom of its target range over the coming year. Any significant disappointment could bring it closer to further easing measures.

For more, read Bloomberg Economics’ full Week Ahead for EMEA

Asia

Governments and central banks across Asia are trying to come to grips with the fallout from the coronavirus outbreak as China continues to count the cost to its economy.

China CPI and PPI data on Monday may show how disruption to output have pushed up prices. India is also set to report a jump in inflation, pushing it further away from the central bank’s target. And New Zealand’s central bank is likely to keep interest rates on hold.

For more, read Bloomberg Economics’ full Week Ahead for Asia

Latin America

Brazil’s central bank on Tuesday posts the minutes of its Feb. 5 meeting where it cut the key rate to a record-low 4.25% and signaled an end to the current easing cycle. Investors and analysts will be looking for a fuller elaboration on the bank’s hawkish turn.

Mexico Monetary Policy Interest Rate

On Thursday, Mexico’s central bank will probably lower its key rate for a fifth consecutive meeting to 7%, while Peruvian policy makers are all but certain to remain on hold at 2.25% for a third month.

A day later, gross domestic product data in Colombia will likely show the Andean nation’s economy remains one of region’s fastest growing.

For more, read Bloomberg Economics’ full Week Ahead for Latin America

--With assistance from Benjamin Harvey, Fergal O'Brien, Malcolm Scott, Margaret Collins and Robert Jameson.

To contact the reporter on this story: David Goodman in London at dgoodman28@bloomberg.net

To contact the editors responsible for this story: Simon Kennedy at skennedy4@bloomberg.net, Zoe Schneeweiss, Craig Stirling

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