ST LOUIS (REUTERS) - The US Federal Reserve will not have much additional information in hand at its March 17-18 meeting to justify another interest rate cut beyond the 0.5 percentage point emergency reduction approved this week, St Louis Federal Reserve President James Bullard said on Wednesday (March 4).
The Fed on Tuesday, in its first rate cut outside of a regularly scheduled policy meeting since the height of the financial crisis in 2008, acted to shield the US economy from the impact of the fast-spreading coronavirus outbreak.
"I don't want to prejudge what will happen at the March meeting," Bullard said on Wednesday, speaking before an academic lecture sponsored by the St Louis Fed. "But we are not going to have a lot of information that is new."
In deciding on the appropriate size of the emergency cut this week, Bullard said, "We made the best judgment we could," adding that he felt the Fed was now "positioned for a fairly large outbreak...across a large swath of the population."
"I would expect to see a lot of cases," Bullard said. But for the Fed to move again, "I think that what you would have to see is that even that surprises to the upside and makes the situation more dangerous than it already is."
Investors expect the Fed to cut rates perhaps two more times this year on the outlook that the coronavirus outbreak may prove more persistent and have a deeper economic impact than currently estimated. Interest rates are now in a range of between 1 per cent and 1.25 per cent, approaching zero as they did during the financial crisis more than a decade ago.
Bullard, who is not a voter on Fed policy this year, said the US central bank is getting daily information on the health impact of the coronavirus, and will have in hand an upcoming report on February jobs and other fresh information.
But he noted that in such an uncertain environment it will be difficult for officials to put together new economic forecasts for the March policy meeting and have much faith in their precision.
"We are going to have very wide confidence bands around those" forecasts, he said. "It continues to be a volatile environment and we continue to be very cognizant of how the virus is evolving and how this is effecting the economy. We are tracking this day by day."