Economic data will show coronavirus impact 'fairly soon' -Powell

Fed chair says global economy at risk

"You have a squeeze going on, to do with difficulty in getting lots".

Speaking in Strasbourg on Tuesday, European Central Bank president Christine Lagarde was more explicit than Powell about the limits to central bank power.

Minneapolis Federal Reserve Bank President Neel Kashkari said on Tuesday that if the coronavirus threat makes a material impact on the US economy, the Fed may mount a monetary policy response, such as cutting interest rates.

On Monday, Federal Reserve Bank of San Francisco President Mary Daly addressed the problem of combating possible economic downturns when the fed funds target is quite low.

Financial markets offer another pathway for impact on USA growth, he said.

Trump has repeatedly criticized the head of the Federal Reserve since announcing his candidacy for Powell in 2017, an outright and repeated criticism that has not happened publicly from former presidents.

He said the Fed is focused only on achieving its goals of full employment and stable prices.

With risks like trade policy uncertainty receding and global growth stabilizing, "we find the USA economy in a very good place, performing well", said Powell.

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Lyft Inc slid 9.7% after the ride-hailing company forecast slower revenue growth in 2020. The unemployment rate is near half-century lows, Powell said, and businesses are increasingly willing to hire workers with insufficient skills and train them.

There was a flurry of trades Wednesday in eurodollar options that stand to benefit if Chairman Jerome Powell and his colleagues end up implementing much more than the one or two quarter-point cuts that are now being priced as a central scenario for 2020. "There is nothing about this economy that is out of kilter or imbalanced".

U.S. Federal Reserve Chair Jerome Powell said on Wednesday that the central bank would stimulate the economy by aggressively buying large amounts of government bonds, also known as quantitative easing (QE), when the next downturn hits.

"We do expect there will be some effects" on the USA economy, Powell said, but added that it is too early to speculate on the impact.

But any slowdown from the coronavirus outbreak is just a risk at this point.

Powell defended himself when questioned about the optics of attending a party thrown by Jeff Bezos after the annual Alfalfa Club dinner, which Trump family members attended, saying he didn't speak to any of them and was there with his son and his new daughter-in-law.

Some economists though think the Fed might have to go that far if the economy turns bad enough. "We won't get as much Chinese tourism and the other channel I would mention is financial markets, which can create their own transmission into the economy - to the extent there are really strong reactions in financial markets, so we'll be looking at all of that". "My belief is that unless the coronavirus worsens the Fed will likely stay on the sidelines the rest of the year-neither cutting or raising rates".

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