Until the end of next week, the US Federal Reserve will lower interest rates to the lowest level since 2015, which means a move more aggressive than forecast by other Wall Street banks. How will the dollar react?
Last week there was an extraordinary Fed meeting, where interest rates were cut by 50 basis points. The goal of this move was to stimulate the economy, which was clearly out of breath due to the prevailing coronavirus epidemic.
JPMorgan economists, including Michael Feroli, wrote yesterday's report that Fed President Jerome Powell and his colleagues could lower interest rates by as much as a full percentage point in the range of 0% to 0.25% at or before a meeting scheduled for 17 March 18 Analysts say that some US states may suffer from the recent oil market collapse and the spreading coronavirus epidemic, and for this reason they see no reason why the Fed would keep interest rates unchanged.
If the forecasted scenario were to come to fruition, a reduction by a percentage point would cause the main Fed rate to return to the lowest level in 2015. In this regard, its officials would have to consider other options for easing monetary policy, as they had repeatedly signaled aversion to negative interest rates many times before.