MNI TRANSCRIPT: Powell on Economic Impact of Coronavirus

     WASHINGTON (MNI) - The following is the portion of a transcript from

Federal Reserve Chairman Jerome Powell's press conference after the FOMC meeting

Wednesday:

     Q: Going back to outlook for global growth, we've seen significant

headwinds as you said earlier with the partial U.S./China trade deal but now

that there are now concerns following the outbreak of the coronavirus it might

shake global growth and we're seeing reports from Ford and Toyota they're

planning to shut down assembly for an extra week, Apple is recruiting supply

chains, Starbucks is closing down several stores. Are you worried about the

impact of the U.S. Economy and do you see that as a significant risk to the

outlook at this point?

     A: Let me talk about coronavirus specifically and then I'll turn more to

global growth. First, it's a very serious issue and I want to start by

acknowledging the significant and considerable human suffering that the virus is

already causing. There is likely to be some disruption to activity in China and

possibly globally based on the spread of the virus to date in travel

restrictions and business closures that have already been imposed. Of course,

the situation is really in its early stages and it's very uncertain about how

far it will spread and what the macro economic effects will be in China and

immediate trading partners and neighbors and around the world. In light of that

uncertainty, I'm not going to speculate about it at this point. I will just tell

you that, of course, we are very carefully monitoring the situation and, you

know, as you suggested, our framework ultimately is what are the potential

ramifications for the U.S. economy and for the achievement of our dual mandate.

More broadly though, if I can talk about the global economy for a second, and if

you look at the backdrop. You know, if you go back to 2017, that was the year of

synchronized growth that lasted to the middle of 2018 and then you saw a slowing

in growth which lasted right through the end of last year, the fourth quarter

growth globally was quite weak last year and a number of factors played into

that. It wasn't any one factor. There was trade policy uncertainty, absolutely.

But, also, there was the decision by the Chinese authorities to try to reign in

leverage and financial excesses. There was a downturn in the global high-tech

manufacturing cycle, in global auto production there was idiosyncratic strains

in Argentina, Turkey, and then later in Hong Kong and Chile you had social

unrest, so all of those things were playing into that cycle of weakening growth

over the course of 2019 in the last half of 18. I would say now there are

grounds for what I would call cautious optimism about the outlook now for the

global economy. Many analysts are predicting a pick up in growth this year,

although still to relatively modest growth rates and I would -- people are

pointing to and we would support to supportive financial conditions, the easing

of trade tensions, lower odds of a hard Brexit, the high-tech manufacturing

industry does appear to be rebounding well in Asia, including in China. The

latest indicators, manufacturing PMIs, for example, suggest that manufacturing

may have bottomed out and that they're still below 50 in many jurisdictions but

moved up off of the lows. I would just say that none of this is assured. As I

mentioned, we saw the fourth quarter of last year came in quite weak, weaker

than expected, we're not at all assured of a global rebound but there are signs

and reasons to expect it. And then comes the coronavirus, which again it's too

early to say what the effects will be, and of course as I mentioned, we're

monitoring carefully. There will clearly be implications at least in the near

term for Chinese output and I would guess for some of their close neighbors and

we'll just have to see what the effect is globally.

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

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