EDF: Coronavirus poses ‘new risk’ for US growth and world markets | Federal Reserve | China | Wuhan | World

The U.S. Federal Reserve (EDF) believe that the outbreak of coronavirus presents a “new risk”For the economic outlook of U.S and warns about disturbances in world markets.

“Due to the size of the Chinese economy, a significant anguish in China it could be extended to the US and world markets through a reduction in risk appetite, the appreciation of the US dollar and the decrease in trade and commodity prices, ”the US central bank wrote in its semi-annual report to Congress published on Friday in Washington. “The effects of coronavirus in China have presented a new risk to the outlook.”

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The coronavirus It has claimed more than 600 lives since its appearance in China. Some economists have begun to reduce their growth estimates for the United States in the first quarter, as the Chinese economy is expected to slow down due to the outbreak of coronavirus.

Jerome Powell, the president of the US Federal Reserve, will discuss the economy and monetary policy before the House Financial Services Committee on February 11 and the Senate banking panel the next day. The Monetary Policy Report published on Friday aims to inform Congress about the Fed’s outlook and risk sensation for US growth. and the world.

VOLTAGE POINTS

A special section on financial stability described in more depth than in the previous report the possible stress points in some areas. The Fed said that low interest rates had raised asset valuations, and also pointed out the risks in corporate debt markets.

“The concentration of investment grade debt at the lower end of the investment grade spectrum creates the risk that adverse developments, such as a deterioration in economic activity, can lead to a considerable volume of bond rebates to speculative grade ratings , ”Says the Fed. “Such conditions could cause investors to sell rapidly discounted bonds, which would reduce liquidity in the market and cause huge downward price pressures.”

The Fed also mentioned that the volatility in the repurchase agreement markets in September “highlights the possibility that frictions in the repossession markets extend to other markets.”

The central bank of the United States maintained its reference interest rate unchanged at its meeting last month after cutting three times in 2019. Forecasts published in December show that most of them expect to remain on hold until 2020, which would put to the EDF on the sidelines during an election year in the United States.

Powell told reporters on January 29 that monetary policy is “well positioned” to support growth, labor markets and a return of inflation to the 2% target of the Federal Reserve.