Name: Fed's Bullard on the Emergency Rate Cut, Coronavirus, U.S. Economy
Uploaded: 2020-03-13T03:22:38.000Z
Duration: 33 min 45 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

The imperative

Let's start with a big move this week because two weeks ahead of a scheduled meeting, just a couple of hours after a G seven announcement from the finance ministers and central bankers were going to do what's appropriate.

Gerund

50 basis point cut hasn't happened since 2008.

Paul did a great job in his press conference in hallucinating the details around this, but, you know, risks obviously arising that this Corona virus could be more severe than, uh, what were previously thinking.

I think the sentiment for me, anyway, was that we were probably gonna have to move at the March meeting anyway.

Might as well move that up and do it sooner.

I think that was the basic thinking here.

I also think that we got the policy rate to the right place for now, Uh, given the information that we have now, and we took out some insurance against the possibility that this will cause growth slowdown in the US well, you know, that's interesting.

because Donald Trump President Trump is the only person who's calling for more rate cuts.

Wall Street economists are saying the Fed will move again.

50 basis points at the March meeting is that doesn't sound like something you're on board with you.

I don't think I don't think you should prejudge that meeting at this point.

We moved the policy right where we thought it should be.

Given the information we have today, Obviously, it's a very fluid situation, and we are keeping track of things.

But, you know, you've hung around monetary policy for a long time.

It's unlikely we're gonna have that much different of information when we get to the get to the March meeting.

Depending on how you view how rapidly this is, this is gonna move shortly.

But, um, since what we kind of pulled that that decision forward.

I'm not sure you should put a lot of weight on the march meeting right now.

Anyway, we could meet intermeeting anyway, which we've just shown that we could do so so I just wouldn't want to put a tremendous amount of focus on this on this March meeting.

There won't be a lot of new information there that we don't have today, except except how the virus is progressing day today.

That kind of information will be, uh we'll have a little bit more on that.

So that is something that the Federal Reserve is now tracking very closely.

I mean, that's what we started doing with China and everybody.

Yeah, well, on the FOMC, uh, was there was this pretty much unanimously supported Was this in any sense of close call as this participants got on the phone and talked about it and voice their opinions and set their boats.

You're not a voter, but nevertheless, everybody has a say in this.

Yeah, I can't talk about the meeting itself, but the vote was unanimous.

And, uh, I think I think it's pretty clear that the baseline of the U.

Best labor markets we've had in 50 years and all the rest of this associate with that great consumption, everything's looking good.

But the downside risks have increased here.

And so we want to take that on board and get some insurance to make sure we keep the expansion going.

As we deal with this temporary virus, they will be temporary.

But the question is, how severe is there gonna be?

Because of the fact that, um, the meeting was so close.

I think a lot of people have concluded that this rate cut was really focused on confidence.

Wasn't the stock market wanting to create help, stand up and say we're here to create some stability and not see the market continue to take Anna's courses?

You know, the first reaction to the move was a big sell off in stocks.

That was the reaction, but ahead in the meeting, there was actually a rally based on the fact that the G seven ministers we're gonna we're gonna meet.

And I think, uh, this was kind of buying the rumor sell on the news kind of situation, so I'm not quite sure you could just read it straightaway.

You know, a lot of people would say, Well, probably doesn't matter that much if you do, if you make the rate cut 10 days ahead or 10 days later and I think that's true from a macroeconomic perspective, But at least my thinking waas, why don't we just go ahead now?

If we if we think we're going to do it in March, we must just go ahead now and UM, and position monetary policy appropriately for the current situation.

Did the stock market in there to it all and the big?

So because we've seen some pretty we've had quite a downdraft from the highs I know the stock market is still maintaining some gains from the beginning of the rally.

Nevertheless, investors like you and I have talked about this over the years, but the the stock market is trying to look ahead and see what the growth prospects are for the US economy.

See what the prospects are for the economy.

The stock market trades minute by minute.

We only meet every so often, so sometimes it looks like one is reacting to the other But I don't really think that that's true.

I think both are trying to forecast the future, and I think that's what was that was going, what was going on here.

How a rate cut is supposed to help deal with a virus This is not like looking at employment reports and retail sales.

Would it be through higher stock prices because of Fed move Does create confidence.

Ah, lower US dollar, lower rates for home and auto loans.

If people are so freaked out about the virus, they can't think about anything else and don't go out and shop and don't make the big decisions like that.

What's the mechanism for interest rates and the virus?

Yeah, I mean, we we know and chair Paul said during the press conference.

You know that this isn't going to fix, you know, medical issues.

I do think we will get an outstanding public health response in the U.

And my thinking on that is that that response is occurring at the federal level, the state level, the local level and even on the individual level And so you've got many reactions to this Corona virus that on net, I think, will be very positive in helping Toa protect us against the spires as best as we can be protected.

I think we have a very good health system in the U.

And, uh, we'll be ableto handle this a cz well, as it can be handled.

So I think what will happen going forward is we'll get news about, you know, there's an outbreak here or there.

I think we'll get many more cases in the days ahead.

But I think, generally speaking, I'm optimistic that we can make a good response here on the health side for that for interest rates.

I think we just had to take on the idea that there is risk to growth to the downside, and, uh, that would naturally lower the rate of the natural rate of interest on.

Do we have to take that on board when we were making monetary policy?

So, um, have you cut your growth forecasts at this point?

A lot of private forecasters have, you know, uh, we're in the We're in the middle of working on that.

Uh, I think my bass case is still that will will do quite well in the U.

I think the fundamentals are good, and I think the base cases that we can bring this virus under control.

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Fed's Bullard on the Emergency Rate Cut, Coronavirus, U.S. Economy

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