Powell says US Fed ready to act as needed

“The fundamentals of the US economy remain strong,” Powell said in a statement amid an ongoing sell-off in global stock markets.

“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.”

The three-sentence statement comes in response to soaring market expectations that the Fed will cut interest rates at its upcoming March meeting, and flags the Fed’s willingness to move if the health emergency continues to spread and impact the economy.

After a weeklong and accelerating market sell-off, some analysts were waiting for such a signal from Powell.

Until the chairman spoke Fed officials had largely focused on the fact that the virus outbreak had not seemed to dent US economic data, and that they expected the outbreak to be contained and any economic damage to be modest.