Good day. Federal Reserve Chairman Jerome Powell told lawmakers that the central bank isn't looking to change interest rates now, but stressed it is monitoring the impact of the coronavirus outbreak on the global economy. Mr. Powell also discussed the transition away from Libor, climate change, digital currencies and the importance of fiscal policy in a downturn at a House Financial Services Committee hearing. The Fed chief returns for another day of testimony today, this time before the Senate Banking Committee.

Now on to today’s news and analysis.

Fed leader Jerome Powell said the central bank is monitoring the extent of global economic disruptions from the coronavirus in China, singling out a risk that has made officials more likely to lower interest rates than to raise them. He told lawmakers it was too soon to say whether the outbreak would change the central bank’s view that the current level of short-term rates remains appropriate to support solid economic growth and hiring. “There’s no way to be confident about anyone’s assessment, and there are a range of assessments,” he said. (Here's a roundup of some of the other issues Mr. Powell discussed on Capitol Hill. He is scheduled to appear before the Senate today.)

“I would say it’s steady as she goes right now, and we can just take the data as it comes in” before changing anything, St. Louis Fed leader James Bullard said. Minneapolis Fed chief Neel Kashkari said the current setting of monetary policy is either neutral or slightly stimulative but that any significant worsening of the coronavirus outbreak could affect Fed policy.

The Reserve Bank of New Zealand on Wednesday left its cash rate at a record low 1.0% and said it expects the coronavirus epidemic to have a short-lived impact on the local economy. “We assume the overall economic impact of the coronavirus outbreak in New Zealand will be of a short duration, with most of the impacts in the first half of 2020,” the bank said. 

S&P Global Ratings now sees U.S. seasonally adjusted annualized first-quarter economic growth likely closer to 1% versus the 2.2% it previously forecast. S&P says its economists currently expect the effect of coronavirus on the U.S. economy to be modest given its limited exposure so far, and says the revised forecast wasn't entirely due to issues related to the virus. The ratings firm attributes 50 basis points the revision to the suspension of Boeing 737 MAX production and exports. (Dow Jones Newswires)

8:30 a.m.: Philadelphia Fed’s Harker speaks on economic outlook in Malvern, Pa.
9 a.m.: San Francisco Fed’s Daly speaks in Dublin
9:30 a.m.: Fed’s Powell testifies on monetary policy report to Senate Banking Committee in Washington
6:50 p.m.: Bank of Japan releases corporate goods price index
7:15 p.m.: Bank of Canada’s Poloz speaks at Australia-Canada Economic Leadership Forum in Melbourne, Australia

7 a.m.: European Central Bank’s Lane speaks at Trinity College in Dublin
8:30 a.m.: U.S. Labor Department releases January CPI
12 p.m.: European Central Bank’s Panetta speaks on panel at Luiss University in Rome
12:45 p.m.: Dallas Fed’s Kaplan speaks in Grapevine, Texas
1 p.m.: European Central Bank’s Lane speaks in Dublin
2 p.m.: Bank of Mexico releases policy statement
5:30 p.m.: New York Fed’s Williams speaks in New York

Personal data collected from services and products lack protection on the national level, despite data-driven services being more prevalent than ever, according to a VoxEU post. Susan Ariel Aaronson, a research professor at George Washington University, argues that ineffective data protection by the U.S. is putting economic and national security at risk. She says some U.S. companies misuse data and present few restrictions on third-party use and the monetization of data. “Foreign firms linked to governments can also take advantage of inadequate governance of personal data,” she adds. “There are emerging concerns that the apps Grindr and TikTok, if under ownership by Chinese parent companies, may be required to share their user data with the Chinese government, although such claims are allegations.” She concludes: “How data are effectively governed will determine if the U.S. can control both the data of its people and its government, as well as its own destiny. If loose lips can sink ships, inadequate data protection can move ships in the wrong direction.”

• U.S. employer demand for new hires appears to be slowing. There were 6.4 million job openings at the end of December, down 14.9% from the same month in 2018. Still, the number of openings has exceeded the number of unemployed Americans, which stood at 5.75 million in December, for 22 consecutive months. (Dow Jones Newswires)
• China’s coronavirus outbreak has scrambled the global trade in commodities, hitting the country’s massive appetite and challenging global supply lines set up to feed it.
• Mexico’s industrial production slipped a seasonally adjusted 0.3% in December from November on weakness in mining output, fell 1% from a year earlier and was down 1.8% for all of 2019, the National Statistics Institute said. (Dow Jones Newswires)
• The Spanish government downgraded its GDP growth forecast for 2020 to 1.6% from 1.8%. According to the government's macroeconomic forecast, GDP growth will be 1.5% in 2021, 1.6% in 2022 and 1.7% in 2023. The forecasts are slightly below those the Spanish central bank presented in December, which expected 1.7% growth in 2020, 1.6% in 2021 and 1.5% in 2022. (Dow Jones Newswires)
• South Africa’s unemployment rate in the fourth quarter was unchanged at a historic high of 29.1% even as the labor force of Africa’s most developed economy increased by 38,000, the country’s statistics agency said. (Dow Jones Newswires)
• Malaysia’s economy slowed in the fourth quarter due to weaker trade and declines in mining and agricultural activities. Full-year gross domestic product in 2019 was 4.3%, the slowest in a decade, versus 4.7% in 2018.

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