Fed fixes key interest rate, and is keeping a close eye on coronavirus

The US Federal Reserve on Wednesday left unchanged a key interest rate that influences borrowing costs, but it also said it is closely monitoring the severity of the deadly coronavirus and the potential for the illness to disrupt the global economy.

The central bank repeated its prior view that the U.S. is growing at a “moderate rate” while inflation remains subdued. Still, Fed Chairman Jerome Powell expressed some concern about the Asian influenza, which has drawn comparisons to 2002-’03 outbreak of SARS, and has claimed more than 130 lives and infected more than 6,000 people worldwide in a little over a week.

“It’s a serious issue. There is likely to be some disruption of activity in China and probably globally,” he told reporters, unprompted, in a news conference after the central bank’s first rate-setting meeting of the year. “We’ll just have to wait to see what the effect is globally.”

Financial markets DJIA, +0.04% SPX, -0.09% have been volatile this week due to worries about how the global economy may slow due to the outbreak of the deadly, novel viral strain, which reportedly originated in Wuhan, China, and is currently known as 2019 nCoV.