to provide stimulus through rate cuts because
their benchmark rates are at or near zero — or
even below.
The result is that pressure is rising on
governments across the world to supply
economic help through tax or spending policies.
China has taken action on several fronts to ease
credit and stabilize the world’s second-largest
economy in the face of the coronavirus.
Members of the U.S. Congress are finalizing
a $7.5 billion emergency bill to fund the
government’s response to the coronavirus
outbreak in a rare act of bipartisan cooperation.
The legislation would speed development of a
coronavirus vaccine, pay for preparedness by
states and localities, help other countries fight
the outbreak and seek to ensure that the vaccine
is affordable when it’s ready, though that could
take a year.
Powell acknowledged that there are limits to
the Fed’s influence to deal with the economic
repercussions of the virus — from closed
factories to canceled business travel to disrupted
company supply chains. But he said lower
rates can help keep credit flowing, particularly
to struggling businesses already laden with
debt that would otherwise face higher
borrowing costs. And he suggested that the
Fed’s intervention would boost consumer and
business confidence and provide “a meaningful
boost to the economy.”
Many economists do see some benefit from the
Fed’s move.
“The Fed obviously cannot address the virus
itself by cutting rates, but they can hope
to short-circuit the potential for a negative