- The Federal Reserve will cut U.S. interest rates by 25 basis points later this month but it is a close call, according to a Reuters poll of economists who have substantially raised their forecasts for the chances of a recession following the coronavirus outbreak.
But a large majority of respondents - just over 85% - challenged the move, saying that cutting interest rates was not the most effective policy to fight disruptions from the spreading coronavirus epidemic. “They just fired off their bazooka, and if it does no good, then what? The argument that the Fed should be early and aggressive and get ahead of events is persuasive, but in this case, when there is little to nothing the Fed can do to prevent the more adverse scenarios, I just don’t buy it.”
“The bar for Fed officials to tell market participants that they are wrong to look for another near-term cut is high given the fragility of markets. So while the March meeting is a close call, we think the Fed will deliver another 25 basis points of easing,” said Michelle Meyer, U.S. economist at BofA global research.
“Uncertainty is high across several dimensions - the Fed’s reaction function, the number of U.S. cases to be reported in coming weeks, the extent of the weakness in upcoming U.S. and global data, and financial conditions,” wrote Jan Hatzius, chief economist at Goldman Sachs in a report to clients.
Sounds like trumpy wants to refinance his debts at a lower rate
Go ahead set rates to zero. See how many businesses switch to crypto.
Trump wants to remove all possible safe guards in case of a serious recession or he wouldn't want interest rates cut further.Why does he want to destroy our protection.
Barely finished with totally wrecking Afghanistan & giving free reign to the Taliban, & allowing the Coronavirus epidemic to take hold, Trump now moves on to further wrecking monetary policy. Rapture!
Also know as, 'please make my loans cheaper'. It's all he wants, anyone at the Fed Who tried to increase interest rates was excoriated. Dropping them will do little good and leave nothing else to do when you need to next.
As profit margins of US firms are low, efforts to lower risk at low interest rates are necessary.