Good day. Senators on both sides of the aisle expressed reservations about economist Judy Shelton joining the Federal Reserve Board during a confirmation hearing. Lawmakers didn't indicate they had concerns about President Trump's other nominee for a Fed board seat, Christopher Waller of the St. Louis Fed. Meanwhile, New York Fed President John Williams said he expects economic growth this year similar to 2019, which should generate inflation around the Fed's 2% target. Also, his bank reduced the amount of planned repo operations in a new schedule.

Please note: The central banking newsletter won’t be published Monday as the U.S. observes Presidents Day.

Now on to today’s news and analysis.

Republican senators dealt a significant setback to one of President Trump’s nominees to the Federal Reserve Board when they raised concerns over her writings and public statements at a confirmation hearing. Lawmakers of both parties on the Senate Banking Committee said they were uncomfortable with at least some of Judy Shelton’s policy preferences.

New York Fed leader John Williams said the central bank’s rate cuts last year put the economy on a path to continue its expansion, and he said what happens next with interest-rate policy depends on what happens with economic data.

In monetary policy-making, flip-flopping is tricky business.

At the Federal Reserve, abrupt reversals by officials in recent years have meant a shift from an inclination toward higher rates toward its opposite. The issue of policy stance switches came back into view as economist Judy Shelton faced senators Thursday in a confirmation hearing to become a central bank governor.

Ms. Shelton, a longtime advocate of a gold standard and a critic of the Fed’s actions during the financial crisis, appeared to abandon those views in the face of senators’ questions. Read More.

Term repos, all of which are scheduled to be 14-day operations, go from $30 billion down to $25 billion through Feb. 27, and then down to $20 billion to March 12. All of this is consistent with Fed plans, which see repos running through at least April. The only catch is primary dealers have sought more on the term operations than the Fed would provide, although the Fed is likely indifferent to this because its focus is on short-term rates, which has seen little volatility while the fed-funds rate has traded as the Fed wants. (Dow Jones Newswires)

• Fed’s Temporary Liquidity Levels Inch Higher to $168.9 Billion

China has pumped billions of dollars into its financial system, raised expectations of an interest-rate cut and pledged to cut red tape, rolling out a bevy of emergency responses to the economic hit of its coronavirus outbreak. But none of the measures announced so far, economists say, can offset the abrupt drop in consumer spending and disrupted business activity in the world's second-largest economy.

• Surge in Coronavirus Cases Raises Questions About Outbreak’s Peak
• Coronavirus Epidemic Further Dents China’s Auto Market
• Coronavirus Outbreak Slams Iran’s Embattled Economy
   

• Treasury to Sell $132 Billion in Debt

Uganda's central bank held its key lending rate at 9%, citing subdued inflationary pressure in Africa's top coffee exporter amid receding food and fuel prices. (Dow Jones Newswires)

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8:30 a.m.: U.S. Commerce Department releases January retail sales
10 a.m.: University of Michigan releases preliminary February U.S. consumer sentiment
10:30 a.m: Bank of Canada releases senior loan officer survey
11:45 a.m.: Cleveland Fed’s Mester speaks in Sarasota, Fla.

The worse the impact from the coronavirus outbreak is on China’s economy, the more prices for consumer goods could heat up, Justin Lahart writes at The Wall Street Journal. He says the Federal Reserve would likely look through any coronavirus-related impact on prices, and if anything, the outbreak might make the central bank more likely to ease policy.

• Germany’s economy didn't grow at all in the fourth quarter, missing economists' expectations of a 0.1% increase, as government and household consumption slowed. 
• The yield on U.K. government debt rose after Treasury chief Sajid Javid resigned less than a month before the March budget presentation. The pound rose against the euro and the dollar as analysts said the move boosts prospects for fiscal stimulus. (Dow Jones Newswires)
• Argentina's consumer prices rose 2.3% in January and increased 52.9% from a year earlier, the Indec statistics agency said Thursday. (Dow Jones Newswires)
• The International Monetary Fund said it is committed to working with Argentina to restructure its debt after government officials blamed the IMF for the country's economic crisis. (Dow Jones Newswires)
• Thailand's economy likely grew 2% from a year earlier in the fourth quarter, slowing from 2.4% in the third quarter, according to a median forecast of five economists in a WSJ poll. (Dow Jones Newswires) 

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