• 407 days Will The ECB Continue To Hike Rates?
  • 408 days Forbes: Aramco Remains Largest Company In The Middle East
  • 409 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 809 days Could Crypto Overtake Traditional Investment?
  • 814 days Americans Still Quitting Jobs At Record Pace
  • 816 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 819 days Is The Dollar Too Strong?
  • 819 days Big Tech Disappoints Investors on Earnings Calls
  • 820 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 822 days China Is Quietly Trying To Distance Itself From Russia
  • 822 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 826 days Crypto Investors Won Big In 2021
  • 826 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 827 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 829 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 830 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 833 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 834 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 834 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 836 days Are NFTs About To Take Over Gaming?
Fake Reviews Go All The Way To The Top

Fake Reviews Go All The Way To The Top

Monitoring service Fakespot Inc found…

Intel Joins Russian Exodus as Chip Shortage Digs In

Intel Joins Russian Exodus as Chip Shortage Digs In

"Intel continues to join the…

After Long Silence, McDonald’s, Coca-Cola to Exit Russia

After Long Silence, McDonald’s, Coca-Cola to Exit Russia

“McDonald’s has decided to temporarily…

  1. Home
  2. News
  3. Breaking News

Fed Cuts Benchmark Rates Amid Coronavirus Panic

Fed Cuts

After a harrowing week for stock markets, things seem to be turning around. On Monday, the Dow Jones Industrial Average jumped by just over 1200 points, making it the largest single-day gain in its history. And Tuesday, despite opening lower, is already paring its losses following news that the Federal Reserve has cut interest rates by 50 basis points. 

As investors increase their bets for central bank easing, there's an ongoing discussion regarding whether the Fed needs to accede to the stress with as much as a full percentage point cut this year or wait to see whether the jangling sentiment over the coronavirus subsides.

Goldman Sachs tends to think so, anticipating more significant cuts in the first half of the year. Goldman claimed the Fed could eventually reduce interest rates by 100 basis points in the first half of the year, up from the 75 basis points it forecast for Friday.

Behind Goldman's modification of its overview: Fed Chairman Jerome Powell's Friday declaration that the Fed would "act as appropriate" to support the U.S. economy.

What's Next?

Trump has repeatedly called for the Fed to slash interest rates, and while the question appears to be resolved that the Fed is poised to move aggressively to lift up the economy, it's less clear how effective or even essential it is at this moment. 

Nevertheless, as the Fed has mentioned, the longer-term effect of a virus-induced slowdown is challenging to assess. Even after last week's Wall Street meltdown, the economic data was mostly positive as the Citi Economic Surprise Index was following around a two-year high of how reports were holding up against expectations.

Obviously, the Fed can't cure the Covid-19 infection, however, it can reduce its impact in the broader economy by easing other constraints. After all, doing this is the Fed's primary job. 

By Michael Kern for Safehaven.com 

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment