“Chairman Powell needs to reach out to his counterparts around the world and buy some time. That’s what a quarter-point could do.” Former Fed Gov. Warsh says the Fed should respond quickly to coronavirus fears: “I think the sooner they cut the better.”
Former Federal Reserve Governor Kevin Warsh said Friday he expects the Fed and other central banks around the world to act soon in response to the coronavirus outbreak.
He said the Fed doesn't have a lot of ammunition to help markets and the economy, so it needs to act quickly in a coordinated fashion with other central banks like the European Central Bank, the Bank of England, the People's Bank of China and the Bank of Japan. A Fed official during the financial crisis in 2008, Warsh has been critical of U.S. monetary policymakers for not normalizing interest rates sooner and thus leaving themselves more room to act when necessary.
"If the data were obvious, the Fed's move would be obvious," he said. "My judgment is if the Fed waits for the data to be definitive, there will be more suffering than is necessary."
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