Although the underlying US economy has remained on solid ground — unemployment is at a historic low and consumer confidence has stood near all-time highs — the Fed said the coronavirus outbreak has significantly hurt
the global financial conditions.
“The coronavirus outbreak has harmed communities and disrupted economic activity in many countries, including the United States,” the Fed statement said. “Global financial conditions have also been significantly affected.”
The Fed could, in theory, take rates negative, as some other central banks have, but Powell continues to resist that idea. The Fed said Sunday it would hold rates steady near zero until it is confident that the US economy pulls out of the coronavirus-fueled economic quagmire.
“We do not see negative policy rates as likely to be an appropriate policy response here in the United States,” Powell said at the news conference.
Despite his resistance to move rates even lower, Powell insisted that the Fed has many more tools in its toolbox if it needs to inject more stimulus into the economy, including the ability to add liquidity into the financial markets.
President Donald Trump has long advocated for negative rates, and he has criticized Powell for pushing back on below-zero rates. He praised the Fed Sunday, however, saying in a surprise appearance
in the White House briefing room the rate cut “makes me very happy.”
Powell, in turn, has called on policymakers such as Trump and Congress to enact stimulus plans of their own, similar to the emergency actions Trump announced Friday and the House’s recent economic support package.
Those actions helped the stock market bounce back in a historic upswing Friday, with the Dow gaining more than 2,000 points. The Fed’s timing may be an attempt to maintain the stock market’s positive sentiment into this week.
“The kitchen sink has been thrown, but there may be more to this,” said Ward McCarthy, analyst at Jefferies. “Policymakers apparently wanted to take advantage of Friday’s late upswing to keep the market momentum going.”
That didn’t happen, however. Similar to March 3, when the Fed issued its previous emergency rate cut, stock futures sold off sharply Sunday evening, as investors feared the Fed’s action meant the economy was far worse than previously believed.
— CNN Business’ Chris Isidore contributed to this report
#vistaspainproperty #realestateagency #spain #costadelsol #marbella #mijas #sales