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2020 - Fed rate cuts possible only if corona virus turns into pandemic


by - 02-28-2020

2020 - Fed rate cuts possible only if corona virus turns into pandemic

"2020 - Fed rate cuts possible only if corona virus turns into pandemic"


President James Bullard said Friday the corona virus outbreak would have to reach levels of the ordinary flu before he would consider cutting interest rates.

Markets are anticipating the Fed will cut rates four times this year amid a scare that the virus would cause a sharp slowdown in global growth. The corona virus has not been classified as a pandemic and has seen far fewer deaths than the flu but its mortality rate is much higher.

Bullard said the COVID-19 spread in China appears to be stabilizing. While he acknowledged the damage the virus already has done to economic growth expectations, he said current Fed policy is “in a good position” as officials examine the situation.Further policy rate cuts are a possibility if a global pandemic actually develops with health effects approaching the scale of ordinary influenza, but this is not the baseline case at this time,” he said in a statement accompanying a speech for delivery in Arkansas.

The comments come amid a stock market meltdown that continued into Friday. Major averages have lost more than 10% this week in what has been the quickest correction in market history.

Bullard said the sell-off has been driven by a “flight to safety” that has pulled down interest rates, “likely benefiting the U.S. economy.”

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