We have long said the monetary and fiscal stimulus should prove significant due to the Covid-19 fear – and it is. The Fed did an emergency 50-basis point rate cut today, and some of the positive influence was likely discounted in yesterday’s ramp. The totally unexpected timing, however, is likely going to increase fear “the government knows something.” We are sticking with the game plan highlighted in our post this morning – Below is the Fed’s statement:
“The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity. In light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target range for the federal funds rate by 1/2 percentage point, to 1 to 1‑1/4 percent. The Committee is closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy.
“Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; Richard H. Clarida; Patrick Harker; Robert S. Kaplan; Neel Kashkari; Loretta J. Mester; and Randal K. Quarles.”
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