March 13, 2020 / 3:17 PM / 24 days ago

Fed's Rosengren says 'disruptive' steps needed to 'dent' coronavirus

WASHINGTON (Reuters) - The coronavirus could realistically infect a quarter of the U.S. population and put “significant stress” on the medical system if it is not put in check, Boston Federal Reserve President Eric Rosengren said on Friday, calling for companies to take “disruptive” steps like limiting travel and meetings to halt the outbreak.

“If one-quarter or more of the population ultimately acquires the virus, as seems well within the realm of possibility, the numbers therefore suggest that we will still face a very significant challenge,” Rosengren said in a joint statement with Dr. Paul Biddinger, the director of the Massachusetts General Hospital Center for Disaster Medicine.

“The tactics that can dent a pandemic are, to be sure, somewhat disruptive. And inconvenient. But they are the right thing to do. And the time is now.”

The remarks represented an unusual break from the norm, indicating the urgency of the situation. Central bankers are typically reluctant to make recommendations about issues outside monetary policy, and are technically in a “blackout” period ahead of next week’s Fed policy meeting that limits their commentary on interest rates and other direct policy matters.

But, in the case of the coronavirus outbreak, the U.S. central bank is struggling to both see the scope of the problem, and manage a crisis that has developed with such real-time speed that it has seen the Fed cut interest rates and roll out emergency liquidity tools to buttress shaky markets.

Lacking firm data on how the virus might spread and impact the economy, Fed officials have turned to their own sources of information about what to expect, in Rosengren’s case tapping the massive healthcare industry around Boston.

The statement with Biddinger carried both a sense of urgency and a critique of businesses elsewhere that “waited too long to take action, waiting for other companies’ actions or delayed responses from government organizations.”

“We’re talking about things like cancelling events that involve gatherings ... instituting work-from-home approaches for all who can ... and doing what we can to tide over workers and businesses for whom demand may dry up for a while,” they said.

“These steps may be difficult, and take some adjustment. But they might, over the coming days and weeks, mitigate the spread of the virus, and its economic impact. And that is well worth it. The inconveniences could forestall much worse options.”

Reporting by Howard Schneider; Editing by Chizu Nomiyama and Paul Simao

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