March 15, 2020 / 9:40 PM / in 16 days

INSTANT VIEW-Fed cuts rates to buffer economy from coronavirus

March 15 (Reuters) - The Federal Reserve cut interest rates for the second time in less than two weeks on Sunday in an emergency move to help shore up the U.S. economy amid the rapidly accelerating global coronavirus pandemic.

In a statement, the central bank said it was cutting rates by to a target range of 0% to 0.25%.

The dollar fell against the euro and Japanese yen in response to the move. U.S. stock futures open at 6 p.m. EDT.

RICK MECKLER, PARTNER, CHERRY LANE INVESTMENTS, NEW VERNON, NEW JERSEY

“For markets, most investors will take some solace in the fact that everyone is rowing in the same direction now both on fiscal and monetary policy. It is something that is definitely needed. The issue for investors still remains is that the virus’ economic impact is still not known, if this is a one-month event or if this is a one-year event, and how deep the cutback in consumer spending is going to be. In some ways this is preemptive, it’s try to get ahead of the curve. But I still think, particularly after this weekend, where most people saw just how much activity stopped, there are still going to be concerns that it could be a deep recession from this. It may be short, but it could be pretty deep.”

JUAN PEREZ, SENIOR CURRENCY TRADER, TEMPUS INC., WASHINGTON

“Clearly the Fed feels that what the governments are doing are inadequate and not enough. So they’re throwing everything they can at this situation. But it’s going to be really volatile when markets open. The dollar will swing wildly. We’ll just have to see.”

KARL SCHAMOTTA, CHIEF MARKET STRATEGIST, CAMBRIDGE GLOBAL PAYMENTS, TORONTO

“This is the Fed’s “whatever it takes” moment.”

“Cutting rates to zero, launching $700 billion in QE, and opening swap lines in coordination with other major central banks are important steps toward smoothing the market dislocations that are putting the global economy at risk.”

“After the initial shock and awe fades this evening, the message that central banks are working in concert to flood the system with liquidity could help reduce volatilities in FX markets. A risk-on rally looks increasingly possible, particularly if political leaders follow through on building support for fiscal stimulus measures.”

MICHAEL O’ROURKE, CHIEF MARKET STRATEGIST, JONESTRADING, STAMFORD, CONNECTICUT

“This is an indication that the central bank is very scared about the environment we’re in. If there is a sharp rally, I wouldn’t be surprised if we see investors sell into it. The policy response is so strong, it’s likely to spook investors.”

“Now they’ve expended all their ammunition. The question is, from a market perspective, have things clearly settled down? And they haven’t. They would’ve been better off waiting until the meeting on Wednesday. Most of their responses have been the wrong thing at the wrong time.”

“We’re facing here the loss of credibility of the central bank from a market perspective…When the investor community loses faith in the Fed, that’s when the market gets very dangerous.”

Reporting by Ira Iosebashvili

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below