Goldman Sachs economists on Sunday predicted the Fed would cut rates, 'perhaps as early as the coming week.'
There is growing consensus that the world’s central banks, including the U.S. Federal Reserve, will soon take policy action to avert a financial meltdown due to the coronavirus outbreak.
Fed Chairman Jerome Powell said Friday that the central bank is “closely monitoring” the outbreak. “We will use our tools and act as appropriate to support the economy,” he said. “Specifically, we see a high risk that the easing we expect over the next several weeks occurs in coordinated fashion, perhaps as early as the coming week,” the Goldman economists said. “Chair Powell’s statement on Friday suggests to us that global central bankers are intensely focused on the downside risks from the virus. We suspect that they view the impact of a coordinated move on confidence as greater than the sum of the impacts of each individual move.
Goldman’s report spurred a sharp reversal in U.S. stock futures. Dow Jones Industrial Average futures YM00, +0.66% , for example, went from an early 300-plus-point loss to a gain of more than 200 points late Sunday night. Last week, Wall Street suffered its worst losses since 2008.
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