The Wuhan coronavirus poses a risk to China's economy over the short term, and there will very likely be some effects on global growth. Federal Reserve chairman Jerome Powell has said the outbreak presented a "new risk" to the economic outlook for the United States. Financial markets are still assessing the fallout from the deadly virus amid disruptions to businesses and as Chinese cities remain under lockdown. A prolonged epidemic could have a lasting impact on global economic prospects.
Against this backdrop, there is ongoing tension in the current configuration of monetary policy, economic performance, and asset valuations. Investors continue to look to the Fed for direction, especially after policymakers lifted the interest on excess reserves rate (while holding the benchmark policy rate). In Europe, the U.K. formally left the European Union on January 31, closing the chapter on a nearly 50-year relationship with its neighbors. Securing a new trade agreement will be a top priority for Prime Minister Boris Johnson in the coming months.
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The Wuhan coronavirus poses a risk to China's economy over the short term, and there will very likely be some effects on global growth.