Powell Says Federal Reserve Will Take Steps to Protect Economy During Virus Crisis
Fed Chairman Jerome Powell vowed Friday that the central bank will use its entire toolbox to support the economy in the face of worldwide fears over the coronavirus outbreak.
“The fundamentals of the U.S. economy remain strong,” Powell said. “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,” he added.
The statement came as U.S. stocks continued to sink on Wall Street Friday afternoon, pushing the S&P 500 index down another 2.7% and putting the market on track for its worst week since October 2008.
However, the market appeared to steady after Powell’s comments, which were interpreted as a strong signal of a likely rate cut, perhaps as soon as its next meeting, set for March 17-18.
The virus outbreak has been shutting down industrial centers, emptying shops and severely crimping travel all over the world.
More companies are warning investors that their finances will take a hit because of disruptions to supply chains and sales. Governments are taking increasingly drastic measures as they scramble to contain the virus.
Such statements from the Fed are unusual and tend to come during crises that cause widespread fears in financial markets. Similar comments were issued after the October 1987 market crash and after the Sept. 11, 2001, terrorist attacks.