(Reuters) - Dallas Federal Reserve President Robert Kaplan said on Thursday he will be looking closely at how far and fast the new coronavirus spreads in the United States as he weighs a decision on interest rates at the U.S. central bank's policy meeting later this month.
The number of new diagnoses of COVID-19 will, he said, be "a key factor at least I’ll be using to judge ... whether we should do more" monetary policy easing at the Fed's March 17-18 meeting. The normal economic data the Fed relies on, he said, are not very useful when the situation is changing so rapidly.
In an interview on Bloomberg TV, Kaplan said he supported the Fed's half-percentage point rate cut undertake earlier this week at an emergency meeting in order to mitigate and moderate tightening financial conditions in the weeks ahead, not to address current stock market weakness. [nL1N2AW0NZ]
Kaplan said he expects the economy to return to his pre-epidemic projected growth pace of about 2.25% this year, after what could be a quarter or a quarter-and-a-half of disruption.
Kaplan said he has ramped up his conversations with business contacts to better understand the effect of the epidemic on their activities. Strategies that companies last year were putting in place to deal with possible supply disruptions because of rising trade tensions have helped them come to grips with the supply-chain disruptions stemming from the epidemic, which originated in China and slowed manufacturing substantially, he said.
Now, Kaplan said the companies he has talked to are telling him they are trying to come to grips with the effect on demand.
