Mar 2, 2020 - Economy & Business

Goldman Sachs expects a full percentage point of rate cuts from the Fed

Dion Rabouin, author of Markets

Fed Chairman Jerome Powell. Photo: Sarah Silbiger/Getty Images

Fed chair Jerome Powell's statement on Friday afternoon that the U.S. central bank was "closely monitoring developments" and would "act as appropriate to support the economy" has eliminated any doubt that the Fed will cut U.S. interest rates at its meeting on March 17–18.

What we're hearing: "A Fed cut in March appears nearly certain," analysts at Goldman Sachs said in a late Sunday note to clients.

  • Goldman is now expecting a 50-basis-point cut this month, followed by two more rate cuts "in April and June, for a total of 100bp."

Where it stands: U.S. interest rates are currently set at 1.50%–1.75%, and cuts at that level would take them to 0.5%, giving the U.S. negative "real" rates — well below the level of inflation, according to the personal consumption expenditures measure the Fed favors.

  • Fed funds futures prices show the market expects the Fed to cut 100 basis points by July, with rates falling to 0.25% by December.

What's happening: Speculation that the rate cuts are on the way helped pare losses in U.S. stock market futures prices, as did comments from Bank of Japan governor Haruhiko Kuroda who said the central bank would provide “ample liquidity and ensure stability in financial markets through appropriate market operations and asset purchases.”

  • The BOJ followed up the statement by offering to buy $4.6 billion of government bonds with a repurchase agreement.

The big picture: Guggenheim Partners global CIO Scott Minerd, a member of the New York Fed's investor advisory committee, said last week that he had been contacted by officials and was expecting a statement regarding "some sort of monetary coordination."

  • That would likely mean the world's central banks are planning interest rate cuts or additional stimulus.

Worth noting: The Fed cut rates three times in 2019 and has added nearly $400 billion to its balance sheet through a new bond-buying program it began after the repo market spike in September.

Go deeper: Federal Reserve: Coronavirus poses "evolving risk" to the economy

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Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 8 a.m. ET: 5,945,737— Total deaths: 365,368 — Total recoveries — 2,515,675Map.
  2. U.S.: Total confirmed cases as of 8 a.m. ET: 1,747,087 — Total deaths: 102,836 — Total recoveries: 406,446 — Total tested: 16,099,515Map.
  3. Supreme Court: Chief Justice Roberts sides with liberals in denying challenge to California's pandemic worship rules.
  4. Public health: Hydroxychloroquine prescription fills exploded in March.
  5. 2020: North Carolina asks RNC if convention will honor Trump's wish for no masks or social distancing.
  6. Business: Fed chair Powell says coronavirus is "great increaser" of income inequality.

Deaths without consequences

Community organizations and activists demand police accountability at a rally in Grand Central Terminal to commemorate the 5-year anniversary of Mike Brown's death by Ferguson Police Officer Darren Wilson. Photo: Erik McGregor/Getty Images

Seven years after the launch of the Black Lives Matter movement, it's still rare for police officers to be charged in the deaths of African Americans — and even more rare for an officer to go to jail.

The big picture: The Minneapolis police officer who was captured on video kneeling on George Floyd's neck has been charged with third-degree murder and manslaughter — which is already a step beyond the consequences other police officers have faced. But it's no guarantee that he will face jail time.

Teenager killed after shots fired at protesters in Detroit

Detroit police during protests on Friday night. Photo: Matthew Hatcher/Getty Images

A 19-year-old man was killed on Friday night after shots were fired into a crowd of demonstrators in downtown Detroit who were protesting the death of George Floyd in Minneapolis police custody, per AP.

Details: The teenager was injured when shots were fired from an SUV about 11:30 p.m. and later died in hospital, reports MDN reports, which noted police were still looking for a suspect. Police said officers were not involved in the shooting, according to AP.

Go deeper: In photos: Protesters clash with police nationwide over George Floyd