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Fed Watch: Fed and the coronavirus – how far are we from a policy response?
Markets are increasing bets on Fed rate cuts, but FOMC speak has so far been absent. How close are we to a policy response and should the Fed even react to the coronavirus risks? With fears of the coronavirus spreading, markets now price in roughly three rate cuts from the Fed in 2020, and a rate cut already in March is edging closer to a coin toss. Although some of the market pricing can be attributed to an “asymmetric risk outcome” in the sense that the bar for a rate hike in the coming years appears to be set at an unprecedented high level, a rate cut has moved closer. But just how close are we? And should the ... (full story)