San Francisco
With the rapid global spread of the new coronavirus and the U.S. stock market suffering its worst week since the Great Recession, central bankers around the world are under rising pressure to reduce borrowing costs to create a cushion against economic harm. So far they have largely resisted. Following are some of their recent remarks:
Federal Reserve Chair Jerome Powell said that: “The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity. The Federal Reserve is closely monitoring developments and their implications for the economic outlook. We will use our tools and act as appropriate to support the economy.”
Swiss National Bank Vice-Chairman Fritz Zurbruegg said that: “The virus could affect the outlook for the Swiss economy. Everything depends on how wide it spreads…If we conclude that monetary conditions need to be adjusted, we will lower the SNB key rate further.”
Dallas Fed President Robert Kaplan said that: “I’ll be carefully watching credit spreads, which up till now, other than for weaker credits, they’ve widened but not substantially. But I’ll be watching that. And a Fed funds adjustment historically has helped when you’ve got a severe tightening in financial conditions so I’ll be watching for that….I’ll be prepared to make a judgment.—Reuters
