FOMC Minutes: Economic Projections 'Downgraded Significantly' Due To COVID-19

The Federal Open Market Committee has released its meeting minutes from March 15, the meeting at which the committee decided to cut the fed funds rates to near zero in response to the coronavirus outbreak.

In the minutes, the committee expressed concern about the economic impact of COVID-19.

“The projection for the U.S. economy prepared by the staff for the March FOMC meeting was downgraded significantly from the January meeting forecast in response to news on the spread of the coronavirus at home and abroad and in response to a related substantial markdown of the staff’s foreign economic outlook, along with recent financial market movements,” the Fed said in the minutes.

The minutes revealed that Cleveland Fed President Loretta Mester was the only FOMC member opposed to the 0.75% cut that brought the fed funds target rate range to between 0% and 0.25%. Mester was in favor of a 0.5% cut that would allow for more flexibility for a future cut if necessary.

In terms of the economic outlook, the Fed said interest rates will remain at their current level until the U.S. economy has weathered the coronavirus downturn.

“Participants noted that the timing of the resumption of growth in the U.S. economy depended on the containment measures put in place, as well as the success of those measures, and on the responses of other policies, including fiscal policy,” the Fed said.

The SPDR S&P 500 ETF Trust SPY traded higher by 2.3% on Wednesday and gained ground following the release of the Fed minutes.

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