The Fed Needs to Cut Rates Now
Coronavirus poses a risk to global growth, and a reduction would be a cheap insurance policy.
Put them to use.
Photographer: David McNew/Getty Images North AmericaThe world economy is facing a material risk in the form of COVID-19, or coronavirus. Of course, it isn't clear how much economic damage the virus will do. But it is clear from the damage being done to China's economy -- and the response of other countries to what’s happening in China -- that the virus could result in a significant worldwide economic slowdown.
Such a global economic slowdown would likely lead to continued upward pressure on the U.S. dollar, which would drive inflation even further below the Federal Reserve’s 2% target in the next couple of years. And a broad slowdown in the world economy would lead to lower U.S. employment growth, as American businesses endure reduced demand for their goods and services.