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Given the current market panic and the slow progress in effective policy measures by the federal government, the FOMC is likely to decide to cut the lower bound of the target range for the federal funds rate back to zero this month, according to economists at Rabobank.

Key quotes

“Our baseline forecast is now a 100 bps rate cut at the end of the March 17-18 meeting of the FOMC. However, we do not rule out an emergency cut prior to that meeting.” 

“If the Fed will have cut by less than 100 bps on March 18, we expect they will be forced to go to zero later in March.” 

“In the coming months we may also see the start of another round of quantitative easing.”

 

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