Fed’s positive economic view complicated by viral outbreak

WASHINGTON — Federal Reserve officials were mostly optimistic about the U.S. and global economies last month, though they noted the risk posed by China’s viral outbreak and were ready to keep their benchmark interest rate at its current low level for the coming months.

Fed policymakers said at their Jan. 28-29 meeting that risks to the U.S. economy had faded since its previous meeting in December, according to minutes released Wednesday. The Trump administration had reached a preliminary trade agreement with China and Congress approved an updated trade pact with Canada and Mexico.

Still, “a number of downside risks remained prominent,” officials said, including the coronavirus, which “had emerged as a new risk to the global growth outlook.”

The minutes of the Fed’s meeting, released with their usual three-week lag, showed that officials were ready to keep key rate at a range of 1.5% to 1.75% for the foreseeable future. Rates at that level would help the U.S. economy withstand any threats from slower growth overseas, policymakers said, and help push inflation back to the Fed’s 2% objective.

Fed officials “viewed the current stance of policy as likely to remain appropriate for a time, provided that incoming information about the economy remained broadly consistent” with their positive outlook.

Christopher Rugaber, The Associated Press