Will Fed Lower Interest Rates Jan 2020?

[Marc]

With the turmoil generated by the Corona Virus outbreak in China, will the Fed lower rates this week? I can think of two reasons; one is the impact on global growth from the fallout from the virus and the second is the "flight to safety" potential for flipping the yield curve in the US.

Any thoughts?

Marc

 

[njhowie]

The Fed will not lower rates. What the market does with longer term rates is another story.

 

[mrfeh]

No.

 

[UnrealizedPotential]

I doubt it will be this week that the Fed lowers rates. If the U.S. economy slows down more throughout the year then we could see more rate cuts, especially with Europe with such low rates and struggling.

 

[Dtail]

My guess is no. I don't really think the virus issue will last throughout the year. Folks were looking for a reason to sell and now they have one.

 

[Aerides]

No, they typically don't react to events like this, and I believe at their last update they signaled they don't plan to make a change in 2020.

If they budged or hinted one now, just 6 weeks after their last public update, it would rattle the markets far worse than any underlying stability they hope to solve for.

 

[HFWR]

To the extent that we have economic issues, interest rates aren’t the problem. IMHO, of course...

 

[Marc]

The average of CPI-W for last year third quarter was 250.200. CPI-W peaked in October and decreased in both November and December. With the decreased demand due to situation in China (specifically fuel and air flights), it is not unlikely that the CPI-W for third quarter 2020 may be lower than in 2019. Besides meaning no COLA for Social Security recipients (which is always bad press), there is a chance for a deflationary period. It will be interesting to see the statement from the Fed tomorrow.

Marc

 

[mickeyd]

Probably not.