New York Fed President John Williams said the outbreak and subsequent spread of the coronavirus “has brought with it new risks to the economic outlook”. “Repercussions” have been “especially strong” in hardest-hit countries, including China, South Korea, Japan, Italy, and Iran. In the US, there were also reports of “supply disruptions and weakening demand” and concerns around tourism and travel sectors, in particular.
Fed’s -50bps rate cut this week was “strong policy action” that provides “meaningful support to the economy and will help sustain the economic expansion. But “the outlook is evolving and highly uncertain”. He added, “in the weeks and months ahead, we will continue to closely monitor developments and their implications for the economic outlook.”
He also noted Fed is monitoring conditions in the money markets closely. “We remain flexible and ready to make adjustments to our operations as needed to ensure that monetary policy is effectively implemented and transmitted to financial markets and the broader economy.”
