China, Singapore and China clients on March 6th According to Reuters Chinese website on March 6th, Fed officials believe that the rapidly spreading Newcomer virus epidemic poses "evolving" risks to the US economy and is rushing to assess the follow-up situation, including business Outlook and the Fed's own response.
New crown pneumonia outbreaks have occurred in South Korea, Italy and other regions, so global stock markets are worried about the decline. The Fed unexpectedly cut interest rates by 50 basis points this week, and the target interest rate range fell to 1.00% -1.25%.
The report said that since then, the number of new cases of new pneumonia has continued to climb, and more states in the United States have infected people who tested positive for the virus.
Fed policymakers assess next situation
The San Francisco Fed wrote in its quarterly report on the banking situation in the US West, "If the number of U.S. cases increases significantly, outbreak prevention and control measures (and panic) could hit local activity as travelers, consumers, and employees avoid the risk of spreading the epidemic. The report also said that in view of the changing situation of the epidemic, there is still uncertainty about the depth and breadth of the impact.
According to reports, there are currently less than two weeks before the next Federal Reserve policy meeting, and financial markets have begun to respond to further interest rate cuts.
New York Federal Reserve Bank President Williams said on Thursday that we are closely watching the impact of the new crown virus on the US economic outlook and will respond appropriately. Fed officials are coordinating with central banks around the world to reduce the risks to the global economy and to ensure the smooth operation of financial markets.
Dallas Federal Reserve Bank President Coplan said a key factor in assessing whether further policy easing is needed is the number of new cases in the next few days, rather than data reflecting past conditions, such as non-agricultural data to be released by the Labor Department on Friday Employment data.
As for whether the Fed will further relax its policy at the March 17-18 policy meeting, Coplan said: "I don't know what the Fed will do next ... Let's watch it day by day."
But Coplan said he hopes the impact of the epidemic on economic growth will only last one quarter or slightly more than one quarter, and he hopes that a rate cut this week will help the economy to recover faster.
Preventive measures
According to reports, the President of the Federal Reserve Bank of Minneapolis, Kashkali, also spoke on Thursday, saying that the Fed would further cut interest rates if needed.
"(Emergency rate cuts) are a precautionary measure because no one knows how far the outbreak will progress," Kashkali said. Uncertainty means businesses may stop activities. He also said that if the effect proves to have passed a few months later, the Fed may pull back interest rates.
The report pointed out that, at present, Fed officials are doing everything they can to ensure the smooth operation of financial markets.
The New York Fed has been intervening in the money market since mid-September last year, when short-term borrowing rates soared because of a shortage of funds.
The Fed also strives to increase the level of reserves in the banking system by purchasing $ 60 billion of short-term US Treasury bills each month.
Policymakers have discussed reducing repurchase operations and debt purchases in the second quarter, but some investors wondered if the Fed needed to postpone these plans due to uncertainty caused by the outbreak. (Zhongxin Jingwei APP)