MNI POLICY: Clarida: Fed in Good Place, Virus Impact Unclear

By Jean Yung

     WASHINGTON (MNI) - Federal Reserve Vice Chairman Richard Clarida on Tuesday

said monetary policy is "in a good place" to support growth and it's too soon to

tell if coronavirus disruptions will spill over into the global economy.

     "We are closely monitoring the emergence of the coronavirus," which is

likely to have a "noticeable impact" on Chinese growth in the first quarter if

not longer, Clarida said in remarks prepared for a conference in Washington. 

     "The disruption there could spill over to the rest of the global economy.

But it is still too soon to even speculate about either the size or the

persistence of these effects, or whether they will lead to a material change in

the outlook."

     The current policy setting "likely will remain appropriate" if incoming

data is broadly consistent with the Fed's outlook. He cited a strong labor

market and said he sees inflation returning to 2%. Clarida made no mention of

heavy losses in equities markets Tuesday and a record low yield on 10-year

Treasury notes after health officials told the public to prepare for the

outbreak to spread in the U.S. 

     The FOMC will be monitoring the effects of its three rate cuts last year

along with other information on a meeting-by-meeting basis, he said. 

     "In its 11th year of a record expansion, the U.S. economy is in a good

place. The

labor market remains strong, economic activity is increasing at a moderate pace,

and the Federal Open Market Committee's (FOMC) baseline outlook is for a

continuation of this performance in 2020," he said.

     "If developments emerge that, in the future, trigger a material

reassessment of our outlook, we will respond accordingly," he said. 

--MNI Washington Bureau; +1 202-371-2121; email: jean.yung@marketnews.com

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