Federal Open Market Committee meet March 18
I though the Fed may have cut again before then, although arguments were it'd just create more panic. Which has happened anyway. March 18 is Wednesday next week so there's still time!
Anyway, back to GS, here's the in a nutshell version:
- We now expect the FOMC to cut the funds rate 100bp on March 18
- a faster return to the crisis-era 0-0.25% rate than under our previous call for two 50bp steps in March and April
More:
- To alleviate stresses in funding markets that have emerged as the coronavirus outbreak has spread, the NY Fed announced today that it will take two steps to boost liquidity and reserves in the banking system over the next month. First, the ongoing $60bn of monthly reserve management purchases in bills will now be spread across a range of Treasury maturities through mid-April. These secondary market purchases will help to clear some of the off-the-run Treasuries on dealer balance sheets. Second. the NY Fed announced a slate of weekly term lm and 3m repo operations over the remainder of the monthly schedule with a minimum size of $500bn each (full schedule here). The substantial increase in operation limits is in keeping with the NY Fed's commitment to provide cash to banks as needed during Treasury market disruptions.
- In light of the continued growth in coronavirus cases in the US and globally, the sharp further tightening in financial conditions, and rising risks to the economic outlook, we now expect the FOMC to cut the funds rate 100bp on March 18, a faster return to the crisis-era 0-0.25% rate than under our previous call for two 50bp steps in March and April.
