Global Economic Policymakers Scramble as Coronavirus Threatens Growth

But he said he would like the Federal Reserve to do more to address the financial challenges posed by the spread of the coronavirus.

“I don’t think the Fed’s looking at it,” he said, “but they should be.

A senior administration official, who was not authorized to speak publicly about the administration’s response, said Mr. Trump and his advisers were not discussing any fiscal stimulus measures, such as immediate tax cuts, because they viewed any damage from the coronavirus as likely to be temporary. Still, the official said, the White House wants the Fed to cut rates, in part to halt a decline in commodity prices.

Mr. Powell has not committed to lowering borrowing costs, which are already in a range of 1.5 percent to 1.75 percent, lower than in previous expansions. But he signaled on Friday that the Fed was ready to act to support the economy. Investors now expect the Fed to slash rates by half a percentage point at its March meeting or even before, and see borrowing costs drop as much as a full point lower by the end of the year.

Even if the outbreak is mild and mostly contained outside China — the O.E.C.D.’s expected scenario — global growth could be reduced about half a percentage point relative to previous forecasts, according to an update that the group released on Monday ominously titled “Coronavirus: The World Economy at Risk.”

Goldman Sachs economists expect global growth to slump to around 2 percent for the full year, down from their previous 3 percent forecast.

Neil Shearing, group chief economist at Capital Economics, wrote in a note Monday that in a good scenario, global growth will fall to 2.5 percent this year — the weakest pace since 2009. In a bad scenario, it could shrink by 0.5 percent, a contraction on a scale with the financial crisis.

Growth in the United States is also at risk from the virus, especially if the number of infections continues to rise. Goldman Sachs economists said in a note Sunday that “while the U.S. economy avoids recession in our baseline forecast, the downside risks have clearly grown.”

Article source: https://www.nytimes.com/2020/03/02/business/economy/global-economy-coronavirus.html