"I think we have got the policy rate at the right place for now," Federal Reserve Bank of St. Louis President James Bullard said in an interview with Bloomberg TV, adding the central bank has taken out some insurance against the possibility that the COVID-19 outbreak could cause a growth slowdown in the United States.
The Fed on Tuesday lowered the target range for the federal funds rate by 50 basis points to 1 to 1.25 percent, its first emergency rate cut since the 2008 financial crisis.
While risks are rising that the COVID-19 outbreak could be more severe than previously thought, "it's unlikely we are going to have that much different of information when we get to the March meeting," Bullard noted.
"I am not sure you should put a lot of weight on the March meeting right now," he added. The Fed will hold its next policy meeting on March 17-18.
At a press conference Tuesday, Fed Chairman Jerome Powell didn't give any clear signals as to whether the central bank would take additional actions at its next policy meeting.
"In the weeks and months ahead we will continue to closely monitor developments and their implications for the economic outlook, and we will use our tools and act as appropriate to support the economy," he said.
Joseph Brusuelas, chief economist at accounting and consulting firm RSM US LLP, believed that the Fed would deliver more rate cuts by the end of the year.
"We now expect another 50 basis points of cuts by the end of the year and do not rule out a return to the zero boundary in the event of an exigent and unusual circumstance of a significant breakout of the virus that results in a large economic downturn," Brusuelas wrote Tuesday in an analysis.
"There is a strong case to be made that the government's fiscal authority, and not the monetary authority of the Fed, needs to take the lead on addressing the economic risks around the Covid-19 virus," he said.
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