WASHINGTON, Feb 28 — A US central banker said today that emergency interest rate cuts in response to the Covid-19 outbreak are possible but not likely unless the epidemic becomes much worse.
James Bullard, head of the St Louis Federal Reserve Bank, last year pushed for more aggressive rate cuts, but now says policy is in a good place.
“In my view, further policy rate cuts are a possibility if a global pandemic actually develops... But that’s not the baseline case at this time,” he said during a speech in Arkansas.
Bullard is not a voting member of the Fed’s rate-setting committee this year, but in September he dissented from their decision, arguing the central bank should have lowered interest rates by a half point rather than a quarter point.
He said the Fed is watching the development of the virus closely, and it certainly will have an impact on China’s growth in the first quarter of the year.
“Policymakers are right to worry about the possibility, which is still strong as of today, that a debilitating pandemic will develop.”
But if the outbreak is contained, Bullard said growth and financial markets should recover, based on past experience.
Former Fed board member Kevin Warsh argued today that the US and other major central banks should take action as soon as this weekend to get ahead of a possible crisis. — AFP
