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Fed Official Says Central Bankers Are Aligned in Coronavirus ResponseThe Federal Reserve Bank of New York president, John C. Williams, said central banks were working in tandem to tackle the global economic threat.
The president of the Federal Reserve Bank of New York pointed to “close alignment at the international level.”Credit...Brendan McDermid/ReutersMarch 5, 2020
The Federal Reserve Bank of New York president, John C. Williams, made clear on Thursday evening that officials viewed the emergency rate cut they approved earlier this week as part of an international push to cushion the economy as the coronavirus threatens global growth.
Mr. Williams, one of the Fed’s three key leaders, spoke in New York two days after the Fed slashed borrowing costs by half a point in its first emergency move since the depths of the 2008 financial crisis. The move came shortly after a call between finance ministers and central bankers from the Group of 7, which also includes Britain, Canada, France, Germany, Italy and Japan.
“Tuesday’s phone call between G7 finance ministers and central bank governors, the subsequent statement, and policy actions by central banks are clear indications of the close alignment at the international level,” Mr. Williams said in a speech to the Foreign Policy Association.
Rate cuts followed in Canada, Asia and the Middle East on Wednesday. The Bank of Japan and European Central Bank — which already have interest rates set below zero — have yet to further cut borrowing costs, but they have pledged to support their economies.
Mr. Williams’s statement is significant, in part because global policymakers were criticized for failing to satisfy market expectations for a coordinated rate cut among major economies. Stock prices temporarily rallied after the Fed’s announcement, but quickly sank again.
Central banks face challenges in offsetting the economic shock of the coronavirus.
Many were already working hard to stoke stronger economic growth, so they have limited room for further action. That makes the kind of carefully orchestrated, lock step rate cut central banks undertook in October 2008 all but impossible.
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