St. Louis Fed President James Bullard risks “obviously are rising” that the coronavirus could be “more severe” than expected. Fed policymakers “made the best judgement we could” regarding this week’s surprise -50bps rate cut. He said Fed is now “positioned for a fairly large outbreak…across a large swath of the population.”
As for another rate cut in the scheduled meeting less than two weeks away, Bullard didn’t want to “prejudge” what will happen there. ” It’s a very fluid situation and we are keeping track of things,” he said. “We can keep our options open there.”
Bullard also said it would be very difficult to prepare the new economic forecasts for the March meeting. “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.”
