"The Fed's desire to be data-dependent may capitulate to market sentiment", said Mr Jon Hill, an interest rate strategist at BMO Capital Markets. "We will use our tools and act as appropriate to support the economy", he said, signaling the central bank is prepared to cut rates if necessary to support the economic expansion.
The stock market this week had its worst performance since the 2008 financial crisis, with the Dow Jones Industrial Average falling more than 3,500 points and the S&P 500 experiencing its fastest correction in history on Thursday.
The United States Federal Reserve may need to move aggressively to cut borrowing costs to cushion the U.S. economy from the effects of the rapid spread of the coronavirus outbreak, which sent global stocks tumbling this week.
In extensive remarks he acknowledged the "serious" downside risks to the economy if the virus does remain uncontained and death rates began approaching those of yearly flu outbreaks. Markets may have fallen off a cliff, they note; the real economy has not. "I don't think the Democrats are going to approve any tax cuts". "We need to first look at how serious the impact from the outbreak would be", Kataoka told a news conference last week.
The Fed cut the benchmark lending rate three times previous year, levelling out at a range of 1.5-1.75%, and since December had been saying the economy was in a good place and it would take a "material change" to the outlook for the central bank to move again.
To some extent, authorities were taking fiscal action.
One bank left out of its forecast for cuts was the Bank of Japan, which it sees leaving rates on hold.
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Canberra has been unrelenting when it comes to the policy and New Zealand is realistic as to whether any concessions may be forthcoming.
Interest-rate futures markets are pricing a 25-basis-point cut at the Fed's March 17-18 meeting, with another one expected in June.
Central banks have made clear they will be cautious.
TOKYO, March 2 (Reuters) - The yen and the euro were on the front foot against the dollar on Monday as traders raised their bets of an interest rate cut by the U.S. Federal Reserve this month to shield the economy from the rapid spread of the coronavirus. There was a similar show of unity among policymakers globally, with officials in Canada, Europe, Japan, Switzerland and elsewhere saying they stood ready to act if the virus remains uncontained. "It's not so much about the interest rate - a 25 basis point interest rate cut is not going to make a business that can not find cashflow feel better", he said.
"This is not what has happened with many other viral outbreaks, but each situation is somewhat different", he said.
"This is a very complex monetary policy issue which, in my view, does not require acute monetary policy action", Bundesbank President Jens Weidmann said.
President Trump, briefing reporters at the White House after the news, renewed his public attacks on the central bank and said it was "about time" the Fed acted like a "leader" and lowered rates.