Investor Alert

April 8, 2020, 2:30 p.m. EDT

Fed staff's worst-case scenario: No major recovery until next year: minutes

The worst-case scenario of the staff of the Federal Reserve for the economy is no recovery until next year, according to minutes of the central bank's March 15 policy meeting released Wednesday. The staff told officials that there were two plausible scenarios for the U.S. economy grappling with the coronavirus. In one scenario, the U.S. economy would start to recover in the second half of the year. The more adverse scenario was that the economy entered a recession with no significant rebound until next year. Facing this uncertainty, Fed officials responded by slashing interest rates to zero and launching open-ended purchases of Treasury and asset-backed securities. Supporters of the full percentage point cut on March 15 called it "forceful." A few officials wanted to cut rates only by half-point, the minutes show. There was concern expressed that the public might think the central bank would be out of ammunition with its benchmark rate essentially at zero. But other officials noted the Fed had other tools to ease monetary policy.

Link to MarketWatch's Slice.