Interest Rates Impacted By Coronavirus? Fed To Weigh Response To Outbreak, Economic Outlook

James Bullard, president of the Federal Reserve Bank of St. Louis, said Wednesday investors should not expect interest rates to be cut again in two weeks when the Federal Open Markets Committee meets.

The FOMC cut interest rates by a half-point Tuesday to 1% to 1.25% to mitigate the effects of the coronavirus outbreak amid fears of a pandemic.

“I think we have got the policy rate at the right place for now,” Bullard told Bloomberg TV. “It’s unlikely we are going to have that much different of information when we get to the March meeting. I am not sure you should put a lot of weight on the March meeting right now.”

He said the group always could convene before the scheduled April 28-29 meeting should conditions dictate.

Tuesday’s action was the first emergency move by the U.S. central bank since the 2008 financial crisis and came as economic outlooks in the U.S. and globally were slashed in reaction to the growing numbers of COVID-19 cases. At least nine people have died in the U.S., among the more than 3,100 victims globally.

The FOMC is scheduled to hold its regular meeting March 17-18, and President Trump has ramped up his pressure campaign for negative interest rates, which he has said would put the U.S. on a more level playing field with competitors. Fed Chairman Jerome Powell has been resisting, saying the current economic conditions do not warrant such drastic action.

Bullard called the situation fluid, and the Fed needs to keep its options open. He said he supported Tuesday’s emergency action because a cut was likely at the coming meeting, and there was no reason to wait.

“The sentiment for me anyway was we were probably going to have to move at the March meeting anyway. Might as well move that up and do it sooner. I think that was the basic thinking here,” he said.

Bullard is not among the voting FOMC members this year.